SRA eyes 50-fold increase in fining power

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20 November 2013


SRA: uplift in maximum fine would help consistency

The Solicitors Regulation Authority (SRA) has shelved its bid to increase the maximum fine it can impose on law firms from £2,000 to £250m and is instead looking for a more modest rise – although still possibly 50 times the current level.

In a consultation paper issued today, the SRA asks for views on whether to increase the fine it can levy without needing to send a case to the Solicitors Disciplinary Tribunal to £10,000, £50,000, £100,000 or some other figure.

The large majority of SDT fines are less than £10,000, and the most it has imposed since being given the power to order unlimited fines in 2009 is £50,000.

Without clearly expressing a preference, the paper hints that the SRA would like a figure at the higher end because this would “improve efficiency and consistency”.

As first revealed by Legal Futures last year, the SRA wanted to bring the maximum fines for traditional firms and solicitors working within them in line with alternative business structures (ABSs), for which they are £250m and £50m respectively. However, the Ministry of Justice has advised that such a large increase would require primary legislation; a “more modest” rise could be achieved by an order of the Lord Chancellor.

In any case, we reported a year ago that the Ministry of Justice considered that the SRA had not made the case for such a large increase, which was also opposed by the SDT and the Law Society, but supported by the Legal Services Board.

The SRA argued in the consultation that the change would improve the consistency of decision-making between ABSs and traditional firms, and would also enable the latter to benefit from the “more efficient resolution of disciplinary matters” and substantially lower costs orders than those made by the tribunal. Other regulators have stronger fining powers, it pointed out.

The regulator sought to counter concerns about the independence of the disciplinary decision maker by highlighting that its adjudicators are “functionally separate” from the investigative units and work to a published decision-making framework underpinned by “transparent decision-making criteria”.

Further, any fine would be appealable to an adjudication panel and ultimately to the SDT.

The consultation also sought support for allowing the SRA to agree with the regulated person involved a higher fine than whatever the limit is. This is currently prohibited, and it is not as yet clear whether such a change could be made without primary legislation.

The SRA asked for views on whether there should be a cap of, for example, £1m on how big a fine could be levied by agreement, or whether it should be unlimited.

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