New SRA Code of Conduct - Consultation
Governance is the new Compliance
The Solicitors Regulation Authority is currently consulting on the future of regulation for the profession. At a recent Legal Services Board Open Forum, the SRA revealed some of their plans for what this future regulation will look like.
"To set, promote and secure in the public interest standards of behaviour and professional performance necessary to ensure that clients receive a good service and that the rule of law is upheld."
In 2011 the SRA will move to a system of outcomes focused regulation which will offer the profession more flexibility in how they operate their businesses.
The stated objectives for the SRA are;
- To concentrate resources on dealing with those firms who pose serious risk to regulatory objective
- To encourage law firms to assess and tackle the risks themselves wherever possible, allowing us to concentrate on those who can‟t -or won‟t -put things right.
How will it work?
"The requirements on firms will be far more focused on acting in a principled manner to achieve desired outcomes for clients, rather than compliance with over detailed rules, and in turn our assessment of firms in our visits will look at the extent to which those outcomes have been achieved."
Summary of Features under the new Regulatory Regime.
- Firms will need to have business and financial reviews, and good governance. Office Manuals will have to work with systems, and those systems will have to have evidence that they work.
- Business Plans will need to be robust and not a document that "just meets compliance requirements"
- Firms will be required to provide financial and business data to the SRA on a regular basis, probably as part of the new "licencing" criteria.
- The SRA will concentrate their efforts on higher risk firms, largely ignoring firms that have good "governance." This means that the SRA will not take a "light touch" approach to firms they have identified as being high risk
- SRA Caseworkers will have far more discretion to decide on how a firm will be disciplined
- The SRA can fine practices up to £2000 at its discretion. That's before they refer them to the Solicitors Disciplinary Tribunal
- The SRA will publicly publish the results of any investigations of firms that do not work to its regulatory principles
- A new Handbook combining the Solicitors Accounts Rules and a new Code of Conduct will form the basis of the new regulatory regime.
- Firms that have quality systems such as Lexcel may find it easier to demonstrate their systems and processes work efficiently.
For many firms that have paid lip service to effective management in the past, this will be an unpleasant wake up call.
The new regime will be in place by October of 2011, so there is time for firms to start putting effective management infrastructures in place.
See the full SRA Consultation at https://www.sra.org.uk/sra/consultations/OFR-consultation.page