In the May 2019 edition of the Risk Alert Bulletin we published the Master Policy with the proposed amendments tracked thereon. We also invited input and comment from the stakeholders.
The Master Policy has now been finalised and the policy wording for the 2019/2020 scheme year is published in this edition of the Bulletin. Practitioners are, once again, requested to read the policy carefully in order to understand the terms and conditions under which indemnity is provided by the Legal Practitioners Indemnity Insurance Fund NPC (the LPIIF).
We wish to draw particular attention to the exclusion of cybercrime (clause 16(o)). Risk management steps must be taken by practitioners within their practices to mitigate cyber risk. Regard can be had to the August 2018 edition of the Bulletin for some suggestions of the steps that practitioners can consider implementing in their practices in order to mitigate against this risk. When dealing with requests purporting to be instructions to change beneficiary banking details, regard must be had to the obligations on the practitioner to verify the banking details of beneficiary- Rule 54.13 imposes an obligation on the practitioner to verify the banking details of clients. The new policy also explains the steps practitioners can take to verify the banking details of intended recipients. Reliance cannot be placed on the email purporting to be from the client or other intended recipient of the funds. Cybercrime is on the increase internationally and there are several insurance products available in the commercial market in order to cover this risk.
Clause 16(m) excludes indemnity where the receipt or payment of funds is unrelated to an existing instruction to provide legal services. This exclusion applies in those circumstances where, for example, practitioners act as paymasters or simply a conduit for funds.
The Executor Bond policy is also published in this edition of the Bulletin. Bonds will not be issued to attorneys who fail to comply with the terms and conditions. Attorneys must give the LPIIF regular updates on the status of the estates they are administering. A separate estate late bank account must be opened as prescribed in section 28 of the Administration of Estates Act 66 of 1965. We wish you a claim-free 2019/ 2020 scheme year.
Telephone: (012) 622 3928