No let-up in regulation by the SRA – but is it time for a change of approach?

Published 22 junio 2020

The lockdown arising from Covid-19 has not meant that the SRA has lost its focus on regulating the profession. On 8 June, for the first time it opened a public consultation on its annual business plan from November 2020 to November 2021, which covers the first year of its recently published Corporate Strategy.

The consultation, which is published here, provides an insight of the Regulator’s current priorities:-

(i)  Anti-money laundering (AML) compliance remains an issue. Monitoring visits will be expanded to all high-risk firms on a three-year rolling basis. A sample of lower-risk firms will also be visited.

(ii)  Firms’ AML policies are also under scrutiny. The SRA will exercise its powers to call in and review AML policies and procedures.

(iii)  It will conduct a thematic review of tax advice, perhaps in response to an increase in claims and complaints in this area.

(iv)  Cyber risks remain a problem. The SRA is to look to other sectors for guidance in order, it says, to help prevent fraud.

Other initiatives include a focus on advocacy standards, the Police Station representation scheme, a review of how the new Standards and Regulations are working, and on-going monitoring of websites. It will also open an office in Wales.

Although the SRA is launching an in-house, ‘arm’s length’ quality assurance team for the disciplinary work it carries out, it has made no commitment to reduce the amount of time taken to complete investigations and to speed up its decision making processes. In our experience, this is a problem. Delay by the SRA causes further distress to legal professionals who are the subject of a forensic investigation, and it can in extreme cases contribute to the demise of the firm.

This consultation comes as a report entitled “Reforming Legal Services: regulation beyond the echo chambers”, by Professor Stephen Mayson of University College, London, has recommended that all legal services providers should be regulated by a single regulator. The report recommends that all legal professionals are registered and that legal services are simplified in order to allow the public to better understand the differences between the services which are available to them.

Whilst the Government has confirmed it has no imminent plans to act upon the recommendations, and the Law Society’s response was that now is “not the time” to focus on an overhaul of legal services regulation, this may pave the way for more flexibility in terms of the type of services that can be offered, and by whom. The new Standards and Regulations allowed freelancers to offer legal services, for example. The profession is likely to be concerned in the coming years by new sources of competition in what is already a challenging and competitive legal services market.

For the time being, however, it is clear that the SRA continues to focus on regulating and monitoring firms closely, and firms should continue to take care to ensure that they and their staff act in accordance with the Code of Conduct despite the current challenges that they face.