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SRA unveils 'flexible' ABS application process

4 January 2012

The Solicitors Regulation Authority has unveiled the two-stage application process to be followed by organisations seeking authorisation to trade as alternative business structures.

The regulator was allowed on 1 December last year to operate as an ABS licensing authority from 23 December. It chose to delay the date it would start considering ABS application until yesterday, 3 January.

Applicants will need to fill in a stage one expression of interest form online asking for details of the entity, its owners, shareholders, and managers and whether they are solicitors, as well as of the two compliance officers required under the new handbook, the COLPs and COFAs.

The SRA will then issue a stage two bespoke pack requiring further details about the individuals behind the organisation, its proposed activities, and the source of funding.

The short and basic stage one form leaves much of the detail to the bespoke pack, suggesting that each application will get special attention but, equally, providing prospective applicants with little visibility.

In an interview to be published in the next issue of Solicitors Journal, Ann Morgan, head of the SRA’s ABS team, said this approach reflected the diversity in the type of applicants, ranging from sole practitioners to non-lawyer owned organisations.

“One size doesn't fit all, so we'll have to assess each application on its merits”, Morgan said. “And while the preparation work has been very comprehensive, we will need to remain flexible in our approach to deal with these new firms.”

The former senior retail banking executive added the two-stage process gave the regulator the opportunity to refine its enquiry as to the fitness to own of the individuals behind an ABS.

“The bespoke forms are necessarily very detailed and aim to obtain significant amounts of information from the applicants. It stands to reason that this search for information will draw out further questions that we might need to ask,” she said.

Morgan further justified the process saying it would be “rigorous and robust - as robust as we are with traditional law firms”.

Information applicants will be expected to supply will include credit checks, CRB clearance, employment history going back five years and Companies House checks.

Where owners are from outside the UK, the regulator will liaise with its local counterparts and other agencies recording similar information.

A flat assessment fee of £2,000 will be payable on submission of the bespoke pack, plus a further £150 for every candidate.

The SRA is yet to finalise the annual regulation fee.

The regulator has six months to decide whether to approve an application, with a three month extension period if further enquiries are necessary.

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