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Law Society hits back over SRA’s plans for huge fines

SRA argued fines necessary to align firms with ABSs

21 May 2012

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The Law Society has strongly attacked the SRA’s plans to introduce fines of up to £250m for law firms and £50m for individuals, replacing the existing limit of £2,000.

The SRA has argued that the move is necessary to give it similar powers over ABSs and law firms, and the LSB agreed earlier this month that there should be a “substantial increase” in the upper limit.

However, the Law Society argues that under the Legal Services Act 2007 the Solicitors Disciplinary Tribunal can already impose unlimited fines on law firms and lawyers.

In a letter to the Ministry of Justice, Russell Wallman, director of government relations at the society, said the “public policy intent” of the Act was to have a “sharp distinction” between the power to fine available to the regulator and to the SDT.

“It would be quite wrong for that approach to be overturned through regulations,” Wallman said.

He said the society recognised that the Lord Chancellor had the power to change the maximum fine.

“We certainly do not argue that it should be fixed for all time – indeed the Law Society favoured a slightly higher figure at the time of the Legal Services Act.

“But in the society’s view it is important that the principle behind the provision should be maintained – namely that it is a limited power, appropriate to less serious matters, rather than being sufficient to enable very serious regulatory breaches to be dealt with in house.”

Wallman said the society regarded the SRA’s proposals as being a “significant breach” of parliament’s intentions.

“If the proposal were to be put before parliament, we would inevitably need to draw the matter to the attention of the relevant scrutiny bodies within parliament.”

The LSB increased the maximum fines regulators could impose on ABSs from £150m to £250m in March last year (see, 7 March 2011).