Fidelity insurance protects the clients of professionals against theft or misappropriation of funds by the professional person or an employee while the client’s funds are under the control of the professional person.
Simply put, if your lawyer had a secret gambling problem and took the proceeds of your property sale to a casino and lost it, there would be little point in trying to sue the now bankrupt lawyer. However, the lawyer’s compulsory fidelity insurance would cover the loss.
All lawyers are required to carry fidelity insurance.
There is no requirement for conveyancers to carry fidelity insurance. This has led to problems:
(Courtesy of The Herald & Weekly Times Ltd)- Photo by Sharon Walker
“…people routinely handed large sums of money to conveyancers, some of whom were untrained, had little experience and no insurance. Unlike lawyers, who pay up to $6,000 a year for insurance, conveyancers have no cover to protect clients if something goes wrong.
A Dandenong man, David Pretious, 40, lost $85,000 after a conveyancer took his money to make a land and housing building contract package in April last year.
“The problem is, there’s no central place where complaints are recorded…the Law Institute directs people to the Office of Fair Trading, but it isn’t their responsibility either…there was something wrong with an industry that allowed people without accreditation to handle hundred thousand dollar transactions.”
Malpractice and lack of training in the industry was “out of control”.(a person) who previously used an untrained conveyancer had discovered a $48,000 covenant on her property for which she was liable. “They didn’t check the title before final settlement,”
“Because most conveyancing companies have no compulsory insurance, audits or training, the victims have no recourse.”
Law Institute spokesman Kevin Childs said if lawyers made costly mistakes, clients could claim through the Solicitors Guarantee Fund.”
(Herald-Sun newspaper 16 June, 1996)