Why audit trails are so important in conveyancing

In the face of the SRA’s (Solicitors Regulation Authority) declaration that the pressure surrounding anti-money laundering (AML) checks will persist throughout 2023, and the looming threat of exorbitant insurance premiums imposed by professional indemnity (PI) insurers conveyancers find themselves enduring relentless scrutiny.  

In this challenging landscape, it is crucial conveyancing solicitors take every possible step to protect themselves and their clients. One effective way to prove compliance with regulations more efficiently is by implementing a digital audit trail. 

What is a digital audit trail? 

When visited by the SRA, a firm must provide evidence of maintaining compliance and adhering to regulations, and an audit trail enables you to do just that. It is a chronological record, stamped with dates and times, documenting the history and details of financial transactions and more. A well-executed audit trail should demonstrate what actions were taken, when they occurred, and the rationale behind those actions. 

By implementing a digital audit trail, you can streamline the process of evidencing your adherence to due diligence requirements throughout the entire conveyancing process. This eliminates the administrative burden of manually maintaining a trail of historical evidence.  

Why digital audit trails are important 

The SRA’s recent imposition of a duty on 6,000 firms, to provide data on the scale and potential risk of their work, indicates that the burden of compliance reporting will continue to persist. 

Implementing a digital audit trail can prove highly beneficial for firms, both during compliance reporting and at the time of PII renewal. This solution facilitates convenient access to valuable data, which can be seamlessly incorporated into proposal forms and extracted for audits, without excessively consuming time. 

John Wooldridge, Executive Director of the legal practices group at Howden Insurance Brokers notes that, "A great deal of detail is needed to complete proposal forms and sometimes firms find that they don’t collect this in a way that enables them to answer the questions – or certainly not without a great deal of effort including hours reviewing records."

Benefits of a digital audit trail  

The benefits of adopting a digital audit trail are numerous, as outlined below: 

Ease of compliance reporting 

Tracy Thompson, Lead CQS Assessor, recommends that law firms follow a three-tier process to demonstrate compliance:  

1. Stating what they do 
2. Doing what they say 
3. Providing evidence 

Within this process, evidence is a critical component, as it validates your firm's adherence to protocols.  

A digital audit trail provides an easily accessible record to demonstrate that you’ve taken the reasonable steps required to meet your compliance obligations. Many digital solutions now provide access to the original data and documentation stored for you along with a record of how and when the information was provided, efficiently helping firms meet the third tier. 

Timesaving 

The SRA may require further clarification on e-verification results and how any flagged matters were handled. With the right technology, you can more efficiently address your conveyancing tasks and effortlessly extract and obtain the results at any time, saving valuable time and effort.  

An audit trail is undeniably effective in proving that proper checks were conducted, and protocol followed throughout the entire conveyancing transaction, fulfilling both due diligence and anti-money laundering (AML) requirements.  

Supporting PII renewals 

Insurers assess risk when determining coverage eligibility, making it essential for firms to have policies and procedures in place to mitigate risk. Firms must demonstrate that these measures are actively implemented and followed throughout the organisation. When renewing professional indemnity insurance (PII), firms must submit a fully completed proposal form along with a claims summary spanning at least seven years.  

By leveraging a comprehensive digital audit trail, you can easily extract the information needed at the time of PII renewal. Conducting conveyancing tasks through InfoTrack's digital conveyancing platform offers the advantage of maintaining a detailed record at every stage of the transaction, which can be conveniently accessed whenever needed. 

Many firms have already experienced the benefits of this approach, with reduced premiums being a tangible outcome. Steven van der Poll, Managing Director, Chapter Law attests to the advantage a digital audit trail has provided their firm: “InfoTrack’s software provided our limited potential pool of insurers with the evidence required to demonstrate regulatory compliance and risk mitigation, resulting in a premium reduction of £18k per annum”. 

Transparency and accountability 

The advantages extend beyond that, as firms can also achieve transparency and accountability through digital audit trails. They enable you to present a comprehensive overview of the actions performed by each individual within your firm. With InfoTrack's Contract of Sale solution, you can track any modifications made to the contract, including the user responsible for the changes and the precise timing of each alteration. 

Even when you're unable to make changes personally, your team can easily carry out necessary adjustments while maintaining a transparent record of those changes. This ensures transparency within your operations. 

Embracing digital audit trails 

Digital audit trails empower conveyancers to efficiently evidence compliance, effectively manage risk, and simplify the PII renewal process. By adopting these technologies, you can meet (CLC and CQS) regulatory requirements easily, as well as protecting yourself against the growing challenges posed by money laundering activities, SRA scrutiny, and escalating insurance premiums.  

InfoTrack offers a platform that enables your firm to seamlessly implement and maintain digital audit trails, facilitating extensive record keeping and extraction at every stage of the transaction. To learn more, speak with one of our digital conveyancing specialists today.