SRA mulls scrapping COLP/COFA regime for small firms
Philip: truly proportionate regulatory model
The Solicitors Regulation Authority (SRA) is to review whether the requirement for small law firms to have compliance officers is “overkill”, it emerged today.
Every law firm in England and Wales has had to have a compliance officer for legal practice and for finance and administration (COLP/COFA) since the start of 2013.
But speaking at a Westminster Legal Policy Forum event in London, SRA chief executive Paul Philip said the SRA was going to focus ensure that the burden of regulation does not “unduly fetter” small firms’ ability to compete and thrive.
“This will include a review of the COLP and COFA arrangements for this sector, looking at whether this framework is really required for such businesses, or whether quite simply it’s overkill,” he said.
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Later answering questions, Mr Philip suggested it was about “creating a bit more informality” but without removing responsibilities. As an example, he questioned the need for a sole practitioner also to be a COLP and COFA.
Mr Philip outlined the SRA’s “fundamental” operational and strategic reform agenda, including a 10% reduction in its budget for 2015 and “cutting bureaucracy, red tape and unnecessary regulatory activity”.
He continued: “Another important component of the reform package is pressing hard on the development of a regulatory model that is truly proportionate. We have some way to go on that.
“A model that provides appropriate consumer protection whilst, at the same time, does not introduce, or include, components that are unnecessary, costly or unduly burdensome for legal businesses; or indeed, a regulatory model that includes inappropriate barriers to entry to the marketplace.”
As examples, he highlighted the SRA’s proposals on the minimum terms for indemnity insurance, education and training reforms – including ending the “fig leaf regulation” of the current CPD regime – and changing the way multi-disciplinary practices (MDPs) are licensed as alternative business structures (ABSs).
Under the current rules, where an MDP has non-lawyers providing non-reserved legal services that are already regulated by another regulator, these services are also regulated by the SRA once the MDP becomes an ABS. The SRA is proposing that in future it will not regulate such activites subject to appropriate safeguards and Mr Philip said he was “pretty sure [the SRA board] will come the right decision” on this when it makes a decision on this later this month.
“This in turn, if agreed will inevitably lead to a review of the separate business rule to ensure that traditional solicitors firms are not disadvantaged in the marketplace,” he added.
Mr Philip said he also saw “a new dawn emerging” in the SRA’s relationship with the Law Society.
“The dramatis personae have changed radically since last year. There is much more that can be achieved within the present framework and I am committed to this agenda. I am not going to let the odd difference of opinion get in the way of us working, either with the marketplace or the representative body.”
Tags: ABS, Alternative business structures, COFA, COLP, compliance officer for finance and administration, compliance officer for legal practice, MDP, multi-, Solicitors Regulation Authority
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