Hundreds of firms face SRA enforcement action over COLP and COFA failure

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26 September 2012

Deadline: firms need compliance officers in place by 1 January 2013

Hundreds of law firms that have yet to nominate their compliance officers could soon face enforcement action, the Solicitors Regulation Authority (SRA) has warned.

In separate developments, the SRA is to conduct visits to 100 random law firms to check on their compliance with equality and diversity rules, while more than 10,000 solicitors have registered their intention to join the Quality Assurance  Scheme for Advocates (QASA).

Around 750 firms had not nominated their compliance officers for legal practice (COLPs) and for finance and administration (COFAs) by the 31 July 2012 deadline, and by mid-September the SRA said this number was 600. In a statement, the SRA said it will this week “have to consider moving from constructive engagement to enforcement action against those yet to nominate their compliance officers”.

SRA director of risk Andrew Garbutt said: “We’re enormously encouraged by the response but the small number of firms who have not yet nominated their COLP/COFA must do so now. We have sent three reminders and we will be following-up with firms over the next few weeks. Nominating a COLP and COFA is a regulatory requirement and we will have to take disciplinary action if firms do not comply.”

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Further, if firms do not have compliance officers in place by 1 January 2013, they can lose their licence to practise.

Over the next two weeks the SRA expects to approve the first tranche of compliance officers – likely to number several thousand – who have been subject to verification of their suitability using predominantly automated checking of SRA data.

It is also already engaging with those firms which have either disclosed suitability issues for their proposed COLP or COFA, or where those nominated are unknown to the SRA.

Further scrutiny of some nominations will take place where the nominating firm has had issues flagged up by the SRA’s risk-based assessment of the nominated individual or the firm itself. Some 150 firms will also be randomly selected to take part in a scrutiny exercise to test the validity of self-declaration as a regulatory process.

Meanwhile, the SRA is starting a new thematic pilot project focusing on firms’ adherence to principle 9 relating to how they are delivering their equality and diversity obligations in practice.

The pilot will also include an evaluation of how firms are responding to the Legal Services Board’s (LSB) diversity data transparency requirement launched this summer with a deadline for submission of information by 31 October 2012.

Starting this month, 100 randomly selected firms across England and Wales will be contacted by the SRA’s supervision team to arrange visits to find out both how they are meeting their responsibilities and also how the SRA can offer support.

Mehrunnisa Lalani, the SRA’s director of inclusion said: “This thematic pilot will enable us to carry out targeted work we need to do with firms on meeting their equality and diversity duties.

“We will then establish how firms are managing the requirement to collect diversity data, the reasons why some are not collecting it and why some are experiencing difficulties.”

Finally, there will be more than 16,000 lawyers taking part in QASA after the SRA said that more than 10,000 solicitors have notified their intention to become registered.

The Bar Standards Board has not required criminal law barristers to go through a similar process, but says it regulates 6,000 of them. ILEX Professional Standards – the third regulator involved in the scheme – regulates several dozen.

The SRA said that over the next month it will begin communicating the anticipated roll-out of QASA from early January 2013; lawyers will not be able to undertake criminal advocacy without being part of the scheme.

Once approved following a final consultation – which closes on 9 October – QASA is scheduled to launch on 14 January 2013 in the Midland and Western circuits, followed by the South Eastern circuit in June 2013 and the North, North East and Wales/Chester circuits in September 2013. The SRA said 40 responses have so far been received to the consultation.

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