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SRA moves to stem increased compliance burden fears

Senior executives at the Solicitors Regulation Authority are moving to appease lawyers’ concerns over a possible rise in the compliance burden when the new handbook comes into force in October.

5 May 2011

Speaking at the Law Society at the first of a series of nationwide roadshows about the SRA’s new handbook yesterday, chief executive Antony Townsend said the new 50-page code looked and felt different and gave firms the freedom to organise their regulatory affairs in the way they thought appropriate to comply.

The majority of firms “won’t need to start from scratch if they are run in a manner which is sound and ethical”, he said.

Townsend also sought to clarify the position of the new officers that all entities providing legal services will have to have in place by the end of 2012 – compliance officer for legal practice (COLP) and compliance officer for finance and administration (COFA).

The requirement for all firms irrespective of size to appoint COLPs and COFAs has caused particular concern among smaller firms and sole practitioners. This includes fears that the new officers would be first in line in the event of SRA action, making firms wary that they would find it difficult to fill the positions.

But the SRA’s chief executive said the new requirement should not cause major changes in well-run practices.

“COLPs and COFAs will not be sacrificial lambs for what goes wrong in firms,” he said. “The new rules are about making sure there is somebody in the firm who ensures that there are systems in place to comply with the new principles.”

Answering a question from the audience, Townsend said COLPs and COFAs would be responsible for making decisions such as whether to refer a compliance concern to their firms’ managers but would not, in ordinary circumstances, be expected to report such matters to the SRA.

He also sought to reassure the profession that outcomes-focused regulation would not increase reporting requirements. The regulator had been cautious about not imposing further reporting requirements, he said before adding: “We’ll be looking at collecting additional information in relation to the soundness of the business but this will not be huge reams because we’re aware we shouldn’t be asking for too much.”

SRA speakers in a separate session focusing on enforcement were keen to send out a similar message.

Responding to a question about the collection of information for the purposes of ranking firms on the SRA’s risk scale, head of legal policy Carol Westrop said the regulator would work from existing information it held on firms based on renewal documentation.

She added the regulator was also considering options to source firm information from the insurance sector to avoid having to ask firms for the same information. This would put the sector in a situation similar to that when the Solicitors Indemnity Fund was in place, where the Law Society’s regulatory arm had access to firm information as the de facto underwriter of the closed market.

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