Risk Management Self-Assessments

Australian Institute of Conveyancers (NSW Division) RISK MANAGEMENT SELF-ASSESSMENTS Introduction and the Risk Management Program: The Australian Institute of Conveyancers NSW Division (the Institute) first introduced the Risk Management Program in the year 2000. At the time, it was introduced as a tool to assist members in the running of their files and practice to reduce the stresses of day-to-day file and business management and to help reduce the likelihood of a professional indemnity claim. The program was updated in 2005 and made mandatory for all Business Owner Members wishing to receive the Institute’s member discount on the PI insurance policy. Originally, the program required a mandatory annual inspection of the participating member’s business. By 2010, the membership had increased to the point where mandatory annual physical inspections were no longer possible and the program was changed to allow for a mandatory annual online self-assessment together with random physical inspections. To meet the requirements of the program, a business owner member must be able to show: • a reasonable knowledge of risk management procedures (as evidenced by the annual online self- assessment and any physical assessment conducted on the conveyancer’s business), • that a risk management program has been put in place; and • all staff members are familiar with and are uniformly following the risk management procedures set down by the business owner. The program also requires that the business owner’s files be conducted at least in the manner set out in the guidance manual (as discussed below) where it is practical to do so. Of course, this does not prevent members from putting further risk management procedures in place. The guidance manual recommendations should at best be viewed as minimal risk management guidelines and procedures. If you have one or more procedures in place that you consider to be as good if not better risk management practice, then that is acceptable. The manual is intended as a guide only, and is not intended to set procedures in concrete that cannot be altered or enhanced. The Self-Assessment Guidance Manual: The Self-Assessment Guidance Manual comprises three parts: 1. This overview of the program and the self-assessment 2. An overview of the requirements conveyancers is required to meet under legislation in both the maintaining of their licence and the running of a conveyancing business; and 3. The original Search Guidance Manual (the guidance manual). The guidance manual was devised: • to provide conveyancers with a risk management tool which, if implemented, will help reduce the number of professional indemnity claims on the Policy; • to introduce a continuous and measurable improvement system to a member’s business; • to help members provide top quality professional advice and service to their clients; • to assist in the identification and improvement to the internal procedures, systems and corporate policies of a member’s business; • to assist in the provision of a system of minimum standards maintenance and compliance; and • to provide a structured framework for on‐the‐job‐training in a helpful, constructive way enabling maximum return for dollars spent on training and continuous professional development. By implementing the systems suggested by the guidance manual, a conveyancer is less likely to suffer a professional indemnity claim, and should a claim be made, the affected member and the insurers will be better equipped to defend that claim. Business owners should ensure that each employee involved with conveyancing transactions should have access to and follow the guidance manual or such other office procedures implemented in place of those recommended by the guidance manual. It is understood that there may be certain occasions or circumstances where the procedures suggested in the guidance manual are not practical. In such circumstances, the member is expected exercise common sense in exercising the best practice permitted by the circumstances. Who can Participate Business Owner Members participating in the program must satisfactorily complete the online risk management self-assessment by 31 May each year. Satisfactory completion requires that both parts of the assessment are completed and a minimum pass mark of 85% is obtained in Part 2. The participating member must be financial The self-assessment is only available to financial members. To be considered financial, the member must have paid his/her membership fee in full in advance for the membership year commencing 1 April in the calendar year current at the time of carrying out the assessment and have no other moneys outstanding to the Institute. Membership fees cannot be paid by instalments. Anyone who is not a financial member of the Institute is not eligible to participate in the program and is therefore not eligible for the member premium rate negotiated with the professional indemnity insurers on behalf of its members. The full premium rate payable where the risk management program is not completed or the member chooses not to participate, is the member rate plus 50%. Members who are not financial as at 1 April in the current year may contact the Institute to make a request to complete the assessment immediately following payment of membership fees for the relevant year. Such request will not be unreasonably refused provided all matters considered necessary by the Institute to complete membership have been complied with. Failure to achieve an 85% pass mark Members are entitled to make three attempts to achieve the 85% pass mark in Part 2 of the online self- assessment. If the 85% pass mark is not achieved by the end of the third attempt, the member will not be entitled to the member’s rate negotiated for members on their Professional Indemnity Insurance and a loading will be added to their premium. The loading will be determined by the insurance company but is recommended to be 50% of the negotiated member rate. The self-assessment is intended indicate the level of the member’s awareness of risk management and the need to follow risk management procedures. If the member fails to achieve the 85% pass mark after 3 attempts, a physical assessment of member’s files and business may be carried out by a person appointed by the Institute’s Risk Management Committee. If the results of the physical assessment are not satisfactory, the matter will be referred to the Institute’s Risk Management Committee for consideration and any or all the following actions may be taken: • A meeting between the member and the committee arranged to discuss any issues raised by the physical assessment. • A requirement for attendance at one or more seminars by the member • A senior conveyancer appointed to attend on the member for tuition and mentoring • Withdrawal of membership NB: Withdrawal of membership is regarded as a last resort, resolved on only where there appears to be no way to remedy or assist the member to implement reasonable risk management procedures. Where membership is withdrawn, a report will be made to the Institute's insurers for their consideration as to whether they will continue to offer insurance, and if so whether to further load the premiums or take whatever further action the insurers may deem necessary. Member’s right to appeal If the member considers that the conduct or result of the assessment was not fair or reasonable the member may lodge an appeal with the NSW Division Council. The decision of the NSW Division Council regarding any appeal is final. INTERPRETATION: The above is an outline of the risk management program conducted by the Institute. All matters that need to be determined or ruled on will be done by the Risk Management Committee and/or the Council of the NSW Division of the Institute. The decisions of the Council and or Risk Management committee shall be final and binding on all members. Some facts about the AICNSW Professional Indemnity Insurance policy. Cover: $5m in respect of any one claim and $10m in the aggregate for all claims in any year. Premiums: are based on gross turnover of fees each financial year with a minimum premium determined annually. Excess on each $5000.00 or $10,000.00 if you act(ed) for both parties to the transaction. claim: Run‐Off Cover: Conveyancers who cease to practice are covered for claims without having to continue paying premiums. Policy is non‐ Because of the nature of the policy and the provision of run‐off cover, once cancellable: initiated the policy cannot be cancelled. Australian Institute of Conveyancers NSW Division Risk Management Self-Assessment Manual The Risk Management Self-Assessment must be completed annually by Business Owner members of the Institute. This document sets out the guidelines for the assessment and the minimum risk management procedures that members should have in place. It also briefly sets out details of the Institute’s Professional Indemnity Insurance. SECTION 1: TRUST ACCOUNTS Regardless of whether a conveyancer conducts a trust account or not they should be aware of basic trust account requirements. For this reason, some questions on trust accounting are included in the online self-assessment. Trust account requirements are found in Conveyancers Licensing Act 2003, Part 5 ss 52 - 74 and auditing requirements in ss 75 - 80. Further requirements can be found in the Conveyancers Licensing Regulation 2015 Part 5, ss 15 - 30. Extracted below are the relevant sections from CLR 2015 Conveyancers Licensing Regulation 2015 Division 2 Trust accounts 21 Banking of trust money A licensee who receives trust money must pay it into the licensee’s trust account: (a) before the end of the next banking day after the day of its receipt, if that is practicable, or (b) if that is not practicable, as soon as practicable after that day.

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