Revealed: SRA seeks five-fold increase in fining power

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24 September 2014


Ten to the power: SRA seeks £10,000 limit

The Solicitors Regulation Authority (SRA) has reined in its ambitions for massive internal powers to fine solicitors and ‘traditional’ law firms, applying to increase the current £2,000 limit to £10,000.

It had originally wanted to match the powers provided by the Legal Services Act 2007 to fine alternative business structures (ABSs) – £250m for organisations and £50m for individuals – but this was scuppered by the Ministry of Justice, which has to approve any change.

In a consultation paper issued last November, the SRA asked for views on whether instead to increase the fine it can levy – that is, without needing to send a case to the Solicitors Disciplinary Tribunal (SDT) – to £10,000, £50,000, £100,000 or some other figure.

Legal Futures discovered that the SRA has quietly published a response to the consultation and made an application to the ministry to raise the level to £10,000 without making any public statement on the issue.

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The SRA said the majority of 37 respondents supported an increase in its fining powers, and quoted the submission by the City of London Law Society as summing up why £10,000 was the right level for now: “A moderate increase to £10,000 is appropriate and represents an equitable balance between the savings of costs and the maintenance of an independent, fair disciplinary process.”

Both the Legal Services Board and Legal Services Consumer Panel backed a 50-fold increase to £100,000, and the SRA said it agreed this would improve “efficiency and consistency”.

Nonetheless, a “conservative” increase to £10,000 would have “a positive impact upon our ability to improve the speed and efficiency of the imposition of financial penalties as well as substantially reducing the costs borne by both parties”.

It would also reduce the number of cases dealt with by the SDT at first instance (anyone fined by the SRA has a right of appeal to the tribunal), as the large majority of fines handed out by the tribunal are below £10,000. The SDT has strongly opposed the plans. An application has now been made to the ministry.

The SRA also said that it would explore with the Ministry of Justice and Legal Services Board whether it could have the ability to impose higher fines with the consent of the regulated person when negotiating a regulatory settlement agreement.

The SRA noted that it was common for comparable regulators to exercise significant fining powers in-house, such as the Financial Conduct Authority. Further, the Bar Standards Board can fine up to £15,000 and the Council for Licensed Conveyancers up to the ABS level.

The SRA’s preference remains parity between its powers for ABSs and for ‘traditional’ firms, and it said that longer term it wanted to work with the Legal Services Board to achieve “commensurate fining powers, consistent with the other approved regulators”.

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