[1]SRA: regulatory reform
The board of the Solicitors Regulation Authority (SRA) today approved a series of measures to further its regulatory reform programme, including making it easier for multi-disciplinary practices (MDPs) to become alternative business structures (ABSs).
However, it has for the time being pulled back from the proposal to scrap accountants’ reports in their entirety, with firms only needing to file with the regulator those reports that are qualified.
Though some details of its MDP proposals have been amended, at their heart they will mean that the SRA will not have to regulate all unreserved legal activities carried out by an organisation, but in some cases there will need to be regulation by other professional service regulators.
Papers before the board said: “The changes will increase opportunities for practitioners to provide multi -professional services to reach clients in new ways and attract investment without having to set up expensive separate business structures. The next stage of our reforms will aim to assist recognised bodies [ie, traditional law firms] in providing a wider range of services without the need to become ABSs…
“We believe that these changes will benefit consumers by providing greater competition in the provision of legal services, greater opportunities to access holistic services, and potential reductions in cost by services being made available in one place. Multi-professional services may particularly (but not exclusively) benefit business clients – including small businesses that currently do not access advice.”
On accountants’ reports, the board decided to take a phased approach to reform. Firms will still be required to commission reports within six months of their financial reporting period – except for 100% legal aid firms, which will not need to. However, only those reports that are qualified will have to be filed with the SRA.
Further consultation will take place in the coming months to make additional improvements – including revised criteria for the circumstances in which reports need to be qualified – which should come into force in April 2015. This will form part of a wider piece of work reviewing the accounts rules, which should in place for April 2016.
Other changes approved today are:
- Amending the eligibility criteria for the Compensation Fund to focus it on helping consumers and small businesses and to exclude larger corporate claimants.
- Ending the annual ‘keeping of the roll’ exercise, subject to the SRA retaining the right to carry out the exercise on an ad-hoc basis when regulatory need requires it.
- Modifying the overseas rules to clarify the exceptional circumstances in which a solicitor may conduct reserved activities from an overseas practice without requiring full compliance of that office with the SRA Handbook.
- Allowing European law firms establishing in England and Wales the choice of whether to do so as an authorised body with the full rights and responsibilities of an SRA-regulated entity, or as an ‘exempt European practice’, which would have the same practice rights as a foreign law firm establishing in England and Wales outside of the regulated arena.