Solicitor fined for loaning money to client at 60% interest
The Solicitors Disciplinary Tribunal (‘SDT’) has fined Richard Barca (of Wilson Barca LLP) £20,000 and ordered him to pay £26,000 in costs after regulatory proceedings were instigated against him for loaning £27,000, with an interest rate of 60% per annum, to a vulnerable client who stood to lose her property and livelihood.
Mr Barca was instructed by a childminder in a precarious financial position to provide advice on a suspended possession order (obtained by Santander) on her property. The client’s home was essential for her work and she faced losing her source of income if her property was repossessed. Mr Barca managed to secure further time for his client. He then agreed (after numerous requests) to lend his client £27,000 to make payments to Santander and other third parties. Mr Barca requested that his client take independent legal advice, however he failed to ensure that she had.
The Solicitors Regulation Authority (‘SRA’) informed the SDT that Mr Barca lent his client money from his personal funds (having re-mortgaged his property). The loan, however, was stated to have come from a company called Safechase, which Mr Barca was the sole director and shareholder of.
Having failed to make repayments on the loan, Safechase repossessed the client’s property in late 2012. Safechase received over £76,000 from the sale of the property which included close to £50,000 in interest.
The SRA stated that Mr Barca had failed to act with integrity, and thus failed to uphold Principle 2 of the SRA Code of Conduct, and also that he had allowed his independence to be compromised, a breach of Principle 3.
Mr Barca submitted, in mitigation, that his client had debts of over £1m and that his loan did not have a substantial impact on her finances. He had tried to help a client in a ‘hopeless’ position, but ultimately only delayed inevitable bankruptcy proceedings. He admitted that failing to ensure the client received independent legal advice was his mistake. He had only intended for the loan to be for three months maximum which, he stated, was why the interest was so high.
The SDT found that Mr Barca’s misconduct was not intentional but noted that he should not have made the loan. They commented that Mr Barca ‘should have known better than to offer a loan to [his client] in such an emotionally heightened and charged environment, without insisting that she took independent legal advice’.
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