Legal compliance update from Access Legal – August 2021

Access LegalBy Legal Futures Associate Access Legal 

Regulators really are busy at the moment!

Solicitors Regulation Authority

Another five firms have been fined for AML breaches, which follows on the heels of six that were recently fined £800 each with £600 costs; it is of note that two of these firms held the CQS accreditation and another two held the Lexcel accreditation; I hope they notified the Law Society in line with the Scheme Rules (it will be interesting to see what, if any, impact breaches in this key compliance area has on their accreditations).

The SRA has added a new question to the Practising Certificate Renewal form, namely, “Does your firm provide services in scope of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (as amended)?”; most firms will already have answered this in other communication with the regulator, but it is worth reviewing the position again.

The SRA could potentially get access to suspicious activity reports submitted by law firms to the National Crime Agency. Amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 Statutory Instrument 2022 would allow this to happen. The government is keen to ensure that the UK’s anti-money laundering and counter terrorist financing regime effectively deters money laundering and terrorist financing activity, whilst being proportionate and managing burdens on businesses.

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Legal Services Board

A recent report published by the LSB has found near unanimity among the public that lawyers should have to demonstrate more actively than now that they remain competent throughout their careers. The LSB also liked re-certification linked to competence like doctors to drive up competence overall and root out poor performers. There should also be regular spot checks for all lawyers to verify compliance. It is of note that the report referenced “lawyers and all legal professionals” so is this an indication that any future competency regime will apply to all client facing legal staff, not just solicitors?

Work has begun to create a consistent approach across all the legal regulators to sexual misconduct, racial harassment, bullying and other forms of “anti-inclusive misconduct”. The LSB is developing a statement to set out agreed common principles on the treatment of such misconduct by regulators and tribunals in a bid to reduce differences in the way they are handled.

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HM Revenue and Customs is consulting on the way that trading profits – including profits of the solicitors’ profession – are allocated to tax years for tax purposes. Broadly speaking, the current basis period rules allocate profits from the accounts of an ongoing business to the tax year in which the business’ accounting period ends. The proposals would change that so that profits of the business that ‘arise’ in each tax year would be allocated to that tax year. Those firms that draw up accounts to a period other than 31 March to 5 April will generally be more affected than others. Firms should speak with their accountants to see what impact this proposed change could have on them.


HMLR has released a new form for conveyancers which aims to reverse a significant rise in the number of incorrect documents it receives regarding restrictions on title. A new RXC form has been designed to ensure consents and certificates are correct the first time. The form comprises of ‘panels’ that identify the restriction, the person providing the consent or certificate, the required consent or certificate, and clarification on which dispositions for registration it relates to.

Legal Ombudsman

The LeO has published a report showing the top areas for upheld complaints:

  • Poor communication – 20%
  • Delay – 17%
  • Cost – 16%
  • Failure to advise – 14%

Council for Licensed Conveyancers

The CLC has had to intervene after two professional indemnity insurers offered firms cover that did not comply with its minimum terms and conditions; the “one-off intervention was in response to extraordinary circumstances which approach a market failure”, the regulator has allowed firms that were able to meet stringent conditions and did not carry a portfolio of the high-risk work to continue practising with the cover offered, subject to further protections.

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