Paul Philip

The SRA’s report looked at past cases where law firms had been found to have acted on behalf of sellers of potentially dubious investment schemes. It found that in 63 per cent of cases, solicitors had failed to carry out proper due diligence on those who ran the schemes, with no checks carried out at all in 20 per cent of cases.

The report also found that firms working on such schemes were too often focusing just on the interests of the scheme promoter and were failing to properly protect the interest of the consumers.

The latest warning notice makes a number of recommendations to lawyers about investment schemes including a caution for law firms and professionals to be vigilant when investing or advising clients, and to be cautious about schemes and companies using solicitors and law firms to give themselves credibility, rather than because legal work is actually required.

Paul Philip, SRA chief executive, said: “Dubious investment schemes result in very significant financial losses for consumers and we will continue to take robust action where we find solicitors are involved. While most solicitors would never willingly participate in such schemes, those that do, whether knowingly or not, lend a veneer of credibility which sellers can exploit to help persuade people that their offer is legitimate. Not only does that harm those who buy into these schemes, it undermines confidence in the profession as a whole.

“Our new review looks at the types of schemes we are seeing, what sort of firms get involved and how that happens. It sets out how schemes change and who they target. We are also publishing an updated Warning Notice. In my view, these are required reading for all firms.

“Importantly, we know that dubious scheme operators look at the warnings we and other regulators issue and adapt accordingly. Solicitors must never be complacent – stay up to date, do your due diligence and if in any doubt, do not get involved.”