Law Society backs SRA consumer protection efforts

The Law Society of England and Wales has expressed its support for the Solicitors Regulation Authority (SRA) in regard to strengthening consumer protection and enhancing the client money framework. Since July 2024, the SRA has been actively consulting on methods to minimise risks to client money, seeking to bolster public confidence in regulated law firms. Recent discussions have focused on refining the accountants’ reports regime and enhancing the checks and balances managed by compliance officers in law firms.

In its response to the SRA consultation, the Law Society highlighted broad approval for proposals aimed at improving the accountants’ reporting regime and the additional support package for compliance officers. These changes could significantly enhance standards within the legal profession. However, the Law Society raised concerns over the proposed separation of compliance roles, labeling it as complex and impractical. They argued that such measures would disproportionately disadvantage small and medium-sized firms by inflating costs, ultimately impacting consumers and access to justice. The Law Society suggested that the SRA should prioritise gathering data to pinpoint and manage risks rather than imposing a challenging separation of roles, especially in smaller practices.

The Law Society's response also pointed out that many of the proposals could disproportionately affect Black, Asian, and minority ethnic solicitors, as well as legal aid providers and sole practitioners. This, they warned, could have negative ripple effects on the communities these professionals aim to serve. Additionally, the Society expressed concerns about the proposed use of fixed financial penalties, which might inadvertently create new risks or delays and lead to unjust penalties for firms over issues beyond their control.

Brett Dixon, the Law Society vice president, stated “We support the SRA’s ambition to strengthen consumer protection and enhance the robustness of the client money framework. Restoring the historical safeguard that requires firms holding client money to submit annual accountants’ reports to the regulator is a sensible and necessary measure.” He emphasised that it is crucial for all firms, including those currently exempt from submitting accountants’ reports, to file annual declarations, allowing accountants to access routine bank confirmations for verifying client accounts. Dixon added that these steps are proportionate and would significantly improve monitoring and client protection.

He concluded by stressing that “The SRA’s success will depend on the regulator having adequate resourcing, technical capacity, and a clear plan for triage and follow up.” The Law Society welcomes ongoing collaboration with the SRA to bolster client protection, ensuring that these improvements do not compromise diversity and accessibility within the legal profession.