Government rejects profession’s call for convictions check on all ABS partners

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By Legal Futures

20 October 2011

Parliament: last two statutory instruments for ABSs now laid

The government has rejected a call from the legal profession that partners in alternative business structures (ABSs) should have to disclose all convictions and cautions, even if spent.

However, the statutory instrument that will require prospective non-lawyer investors and owners in ABSs to disclose all of their convictions and cautions – without which the Solicitors Regulation Authority (SRA) indicated it would not allow external investors – has this week been laid before Parliament.

It is the second of two key pieces of secondary legislation that need to come into force to allow the SRA to license ABSs. The news keeps the SRA on track to start doing so early in 2012.

The exception to the Rehabilitation of Offenders Act 1974 – which otherwise designates convictions of 30 months’ imprisonment or less as spent after a certain period of time has elapsed – will include the Council for Licensed Conveyancers (CLC), even though it did not request such an exception for itself when its ABS licensing rules were approved. Earlier in the year the government introduced an exception to encompass the heads of legal practice and of finance and administration at ABSs.

A Ministry of Justice spokeswoman said: “This amendment to the Rehabilitation of Offenders Act allows licensing authorities for ABSs to request checks on spent convictions on people who want to become owners or part-owners of these businesses. This will ensure that similar safeguards are in place for users of traditional and non-traditional structures.

“All potential licensing authorities will be required to demonstrate that they have adequate procedures in place to protect consumers before they will be designated as licensing authorities.”

However, the instrument’s explanatory notes reveal that the government rejected the view expressed by the Legal Services Board, SRA, Law Society, CLC and Bar Standards Board that the exception should be extended to all partners in an ABS, saying it “does not presently consider that there is evidence to support that approach”.

As previously reported, the other statutory instrument puts in place an independent appeal mechanism against a range of ABS decisions the SRA may make, such as refusing an application for a licence, imposing conditions on a licence, disqualifying a person from working in an ABS, or imposing a financial penalty.

Appeals will go to the Solicitors Disciplinary Tribunal, rather than the general regulatory chamber of the First-tier Tribunal, as the Legal Services Board wanted and the CLC has adopted.

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