SRA postpones introduction of third-party alternative to client account
Passmore: “no suggestion that this is about getting rid of client account”
The introduction of third-party managed accounts as an alternative to traditional client accounts will be postponed by at least a year to the end of 2016, the Solicitors Regulation Authority (SRA) board decided yesterday.
The SRA launched a consultation on the move in April, arguing that third-party accounts could provide a “lower-cost alternative”, and with the aim of implementing the change in November.
However, the SRA said it now believed that the features of permitted third-party accounts should be set out in its rules and guidance, and this should be incorporated into its consultation on the Solicitors Accounts Rules in spring 2016.
Crispin Passmore, executive director of policy, told the board meeting that the issue could not be separated from the accounts rules reforms.
“It will only work for certain firms in certain circumstances,” he said. “There is no suggestion that this is about getting rid of client account.”
He later told a press briefing: “The surprise for me and the disappointing thing was the number of responses which said that because it wouldn’t work in some circumstances, like conveyancing, it shouldn’t be allowed at all.”
Mr Passmore added that although third-party accounts were allowed in theory under existing rules, firms should continue to contact the SRA, which would consider requests on a case-by-case basis.
The SRA board approved a mixed bag of other deregulatory rule changes, including several aimed at improving the authorisation process.
These included “deemed approval” for compliance officers in small firms (with one to four managers). Where the officer is a sole practitioner or lawyer manager, they will no longer have to apply to the SRA for approval.
In a further change, the board decided that rules which suggest that law firms must carry out reserved activities to be authorised will be amended.
Smoothing the path for alternative business structures, SRA procedures requiring approval of each individual manager in the corporate owner of an ABS will be abolished. The regulator argued that individuals within corporate owners were often remote from the legal services business applying for a license.
The board also agreed that the SRA should be given the power to refuse or impose conditions on the renewal of practising certificates where partnerships had entered administration.
Following the government’s approval of the assessment framework for solicitor apprentices earlier this month, the board approved an amendment to the training regulations to allow qualification through the new apprenticeship routes.
Tags: Alternative business structures, Solicitors Regulation Authority, third-party accounts
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