Number of individuals and firms in dock over COLP and COFA failures rises to 800

Print This Post

16 April 2013


SRA: forensic investigation of 21 firms

The total number of firms and individuals in trouble with the Solicitors Regulation Authority (SRA) over nominations for compliance officers has risen by a third in the past month to nearly 800, it has emerged.

Meanwhile, 21 firms are to be subjected to visits from the forensic investigation team after reasons given for their failure to appoint compliance officers for legal practice and finance and administration (COLPs and COFAs) flagged up “additional areas of risk”.

Whereas 600 individuals and firms were identified in mid-March, a report going to today’s SRA regulatory risk committee puts the number at 790.

Red flags were raised about the 21 firms after explanations for delays in nominating compliance officers included such things as having to care for elderly relatives, being abroad for a significant period, “not bothering” to read SRA e-mails, and deadlock between partners over who to nominate to the roles.

Error, group does not exist! Check your syntax! (ID: 14)

Possible additional breaches suspected include non-compliance with the Solicitors Accounts Rules. Where a firm had not nominated compliance officers and was “still practising in breach of the Authorisation Rules”, intervention could ultimately result, the report warned, although it did not expect many to fall in this category.

Around 300 firms have delayed in providing information to the SRA as part of the COLP and COFA nomination process and 545 firms or individuals failed to disclose information to some degree. A dedicated team of nine SRA officials, including a case manager and four supervisors, has been working on enforcement since the beginning of March.

Disciplinary and regulatory sanctions for offenders are likely to range from the firm being sent a letter of advice about a relatively short delay in nominating, up to referrals to the Solicitors Disciplinary Tribunal (SDT) for dishonestly failing to disclose significant information.

Of the 790 total, the SRA said that where a firm fell into more than one category of rule breach, “it will be considered as an aggravating feature and is likely to increase the level of disciplinary sanction recommended”.

Also covered in the report was the speed of SDT prosecutions against key performance indicators (KPI) – which include that on average cases should be lodged with the SDT no more than six months after they are received by the SRA.

In the first quarter the average age of cases was seven months for each of the three months. In January just 43% met the six-months KPI, while in February and March the figure was 80%.

However, there were just 11 cases in the quarter, compared to 62 in the first quarter of 2012. The report attributed this drop to the “embedding of risk-based regulation by the SRA” and the use of constructive engagement by its supervision officials.

The number of prosecution cases open at the end of March – 282 – was also significantly lower than at the same point last year, when 473 were open.

Tags: , , , ,



Leave a comment

* Denotes required field

All comments will be moderated before posting. Please see our Terms and Conditions

Legal Futures Blog

Know your client checks – A lesson from BHS

Paul-Bennett for Legal Futures

As you will be aware, it is a legal requirement for advisory firms to carry out ‘know your client’ checks. The purpose of doing so is to confirm your client’s identity and to seek to provide protection in respect of anti-money laundering (AML) and terrorist financing laws. The BHS experience before the House of Commons’ work and pensions committee and business, innovation and skills committee shows that firms need to think beyond AML obligations.

September 29th, 2016