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LSB attacks SRA over 'slow and cautious' ABS approvals

Regulator ‘never asked for feedback’, Jordans says of ABS application  

4 December 2013

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By Manju Manglani, Editor (@ManjuManglani)

Chris Kenny, chief executive of the Legal Services Board, has criticised the Solicitors Regulation Authority for being “too slow and cautious” in approving alternative business structures (ABSs).

Speaking yesterday at Managing Partner's Risk Management for Law Firms conference, Kenny said that evidence showed “continuing difficulties for new provider types to enter the market, especially those with truly innovative business models”.

Samantha Barrass, in her final speech as executive director of the SRA, said the regulator had been under “unbearable pressure” to approve ABS applications and to reduce the whole process to “names and addresses”.

Speaking about Jordans’ recent experience of obtaining an ABS license, Kathleen O’Reilly, head of internal legal services, noted that her firm had struggled with the lack of detailed information from the SRA explaining the process, with guidance notes published only after Jordans had been through the ABS process.

She said that there were long gaps in communication by the SRA. O’Reilly added that her firm had contacted the regulator on several occasions to offer face-to-face meetings to discuss its application, but that the regulator “didn’t accept our offer”.

Another issue raised by O’Reilly was the lack of post-authorisation review. She said that her firm “was never asked for feedback” by the SRA, but that the firm had “a lot of feedback” that it could offer.

Barrass acknowledged that the SRA had experienced initial delays in authorising new ABSs in general.

“Yes, we could have authorised some applications more quickly, we had a lot to learn and we didn’t get everything right, particularly in terms of making sure that our approach was not overly bureaucratic.”

But, she argued that the SRA had been using its experience of these applications to create a “much more proportionate system”.

“Lower risk applications now go through much more quickly, but it is absolutely proper that more complex applications are properly reviewed,” she said.

“Clearly, against a background where we had acknowledged the need to improve our processes and were under significant pressure to do so, an easy decision would have been to wave a whole lot through and keep our fingers crossed that nothing went wrong a few months or years down the track,” said Barrass.

“We didn’t do that and we don’t do that. Our responsibility is to the public interest, not our own self interest in getting an easy ride in the short term.”

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