Two thirds of firms say OFR takes more time

Two thirds of law firms say that complying with outcomes-focused regulation (OFR) takes more time than the previous system, a report by the SRA has found.

The research, based on a telephone survey of 1,000 solicitors, also found that OFR was costing more. A large majority of firms, 76 per cent, said they had spent more money on training, 48 per cent on additional administration, 27 per cent on IT and 20 per cent on consultancy fees.

However, a large minority of firms, 40 per cent, said that nominating a COLP and COFA was the only change they had made as a result of OFR.

The regulator said a “notable proportion” of respondents had highlighted uncertainty about their exact responsibilities, including the 15 per cent who were themselves compliance officers.

Only just over half of solicitors, 51 per cent, agreed that OFR made it clear what outcomes should be delivered.

“This is a concern as a lack of understanding of the outcomes could lead to them not being delivered,” the regulator said.

“This could lead to firms attempting to comply in a way that leads them to experience higher costs or firms failing to effectively manage risks to themselves or their clients.

“It was notable that respondents who felt it took too much time and money to comply were also more likely to feel unclear about the outcomes to be delivered.”

MySRA fared worse than any other part of the SRA, with 26 per cent of solicitors giving it a positive rating as opposed to the 43 per cent who rated it negatively.

Only a very small proportion of solicitors said they had used the flexibility used by OFR to a great extent, while 55 per cent had not used it all since the launch of the new system in October 2011.

“The main changes reported by firms were the review of existing policies and procedures, creation of new policies and undertaking training,” the regulator said.

“Firms also mentioned setting up or improving risk management and quality assurance systems.

“Many of the changes appear to be one-off actions – for example, once a document or manual has been updated there are likely to be limited future costs involved. Firms also stated one-off costs like familiarising themselves with the new regulatory regime.”

While complaining that OFR took more time and cost more money that the old system of regulation, 85 per cent of solicitors acknowledged that even if they were not required to by the SRA, their firm would “continue to do what it currently does to comply” simply in order to run well and look after its clients’ interests.

Antony Townsend, chief executive of the SRA, said: “The legal services market is now so diverse that one size no longer fits all.

“OFR allows flexibility to deliver the best outcomes for clients in the way that suits their business needs, but the research shows that flexibility is still not being used by the majority of firms.

“Some firms’ lack of understanding of what’s expected of them presents a risk of unintentional non-compliance. We will continue to engage with firms and listen to their concerns through our relationship management and supervision functions in order that we can provide further clarity where it is needed.”