If you’re scared of OFR, perhaps you haven’t been listening

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13 December 2011

Samantha Barrass, executive director of supervision, risk and standards at the Solicitors Regulation Authority, responds to Michaela Hardwicke's blog last week, The scary new world of OFR

Barrass: much of the SRA's work with firms will be theme-based in future

Last week on Legal Futures, Michaela Hardwicke reported on “a huge amount of frustration over the lack of guidance from the Solicitors Regulation Authority (SRA)” in terms of preparing the regulated community for outcomes-focused regulation (OFR).

In her blog, she also claims to have “clear evidence that a large percentage of the profession does not understand that OFR is a completely different animal to anything we have yet seen, but this is not their fault”.

In her opinion, we at the SRA “could have done a lot more to prepare the profession for what is to come”.

This was the perspective of 60 members of the regulated community attending a seminar, presumably led by Ms Hardwicke.

We do not routinely respond to blogs – but when it’s a posting significantly riddled with errors and misconceptions, we feel we need to put the record straight.

While we are delighted to hear that there was a “natural desire to understand and comply with the new regulatory regime”, it is wrong to suggest that the SRA provided a lack of guidance.

We thought it would be helpful to remind readers what we did to help firms prepare:

  • 28 roadshows over a two-year period in England and Wales;
  • 16 major consultations, including two on the Handbook;
  • 15 webinars;
  • The launch of a relationship management programme in autumn 2010;
  • A pilot supervision programme;
  • Reference group meetings on themes such as risk, ABS, and COLPS and COFAs;
  • Extensive media activity;
  • Speaking engagements at the likes of conferences, seminars and Law Society meetings;
  • Meetings with niche groups such as sole practitioners; and
  • Significant web information, including the publication ‘OFR at a glance’.

And, of course, there is ongoing support from the SRA’s ethics guidance helpline for any firm that wishes to talk through any aspect of its approach to delivering the principles and outcomes. Indeed, in the course of 2010, the helpline took 56,902 calls.

A further mischief is the suggestion that firms will need annually to provide evidence to the SRA of compliance with all of the principles and outcomes. This confuses two things:

  1. The fundamental requirement of OFR that all firms assure themselves that they are delivering the principles and outcomes, in the context of their practice and client base; and
  2. Annual requirements (which we will be consulting on early in 2012) to report targeted factual information to support our ability to identify emerging risks. For example, information about firms’ client bases so we can identify which firms service a more vulnerable client base.

The SRA regulates over 11,000 firms and 130,000 individuals. We need to use our limited resources in the most efficient way to tackle the greatest risks. The exercise implied by Ms Hardwicke has never been on the cards – it is well beyond our resources and would not represent a proportionate use of our time. Setting this type of hare running is unhelpful.

In practice, much of our work with firms will be theme-based in future, reflecting areas of emerging risk, and not on the generality of a firm’s compliance. For example, current issues of concern to us include the client care of vulnerable clients, particularly given the changes in legal aid, and conveyancing.

If we’re engaging with firms, it is most likely to be in relation to particular topics, such as these, when we will seek to be confident that the firm has taken an ethical and informed approach to ensuring the relevant principles and outcomes are being met.

  • The SRA’s ethics helpline can be contacted on 0870 606 2577, Monday to Friday, 9am until 5pm.

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6 Responses to “If you’re scared of OFR, perhaps you haven’t been listening”

  1. We as face2face solicitors (Martin Wyatt) were invited by the SRA to present together with Nick Jarrett-Kerr in the breakout session yesterday afternoon regarding ABS at the SRAs Ethnic & Diversity Group OFR: Opportunities for a Diverse Profession seminar in London. Martin and Nick were able to dispel some myths and encourage solicitors to think more broadly about the opportunities ABS could open up to them and their firms.

    The seminar was well attended (150/200 I’d guess) so the SRA is trying hard to get the message across and made it very clear that they are looking to work with and help firms rather than beat them with a big stick, wherever possible. They recognise the issues and want firms to seek their help and input.

    We are due also to do likewise at the SRAs Birmingham event in the coming weeks and are pleased to be able to help the SRA in getting their message across.

    The success in communication is not how it is delivered but how it is received. As George Bernard Shaw said “The problem with communication ….. is the illusion that it has been accomplished.”

    Clearly more needs to be done using different approaches. Maybe articles like Samantha’s response here would help to get the message over cost-effectively to a wider audience. I am pleased to say that our compliance procedures with OFR firmly in mind is now embedded in the face2face solicitors matter and case management processes to the benefit of our franchisees.

    We at face2face solicitors look forward to playing our part constructively to the good of all in the profession.

  2. Michael Porter on December 13th, 2011 at 11:15 am
  3. I’m grateful for Samantha’s response to my blog and it’s good to see concern from the SRA about my comment that “a large percentage of the profession does not understand” – meaning OFR of course.

    What I’m interested to see now is how this is taken forward. There is no doubt that the SRA has undertaken the many steps set out in Samantha’s blog. It would be interesting to know how the effectiveness of these methods of communicating the messages has been assessed.

    I agree with Michael that the effectiveness of communicating a message is measured by how it is received. The SRA’s April 2010 consultation received 62 responses. When comparing this with the “over 11,000 firms and 130,000 individuals” regulated by the SRA, this response rate of just 0.0005% proves the task the SRA faces.

    The SRA’s policy statement of 30 November 2010 states “we expect to see a strong focus on the identification of risk and to see [firms] take responsibility for managing these risks effectively”. Given this, my humble suggestion would be that an investment of time offering comprehensive training to all firms in risk management would be an effective and positive strategy.

    As Michael says, I hope that this dialogue improves awareness and understanding constructively.

  4. michaela Hardwick on December 13th, 2011 at 2:02 pm
  5. It was interesting to read Michaela’s article but even more so to read the reply from Samantha.

    What will really assist the profession in getting to grips with OFR will be examples of where the SRA has had to point firms in the right direction when a problem has arisen; perhaps something similar to the examples issued by the LeO.

    I am still hearing many firms say that when they contact the SRA for advice about the new OFR regime they are told to go to the Handbook and decide the answer for themselves, which is not helpful or in line with what was said at roadshows; firms know they won’t get “safe harbour” advice but it can be this type of response that can give the impression the SRA is not being very co-operative.

    Open and constructive dialogue will go a long way to building up confidence levels amongst practitioners.

  6. Brian Rogers on December 13th, 2011 at 8:54 pm
  7. At Weightmans, I have over the last 2 days held 3 forums on the roles, risks and rewards (yes I do think there can be rewards as well as risks!) of the COLP and COFA at which representatives of over 30 firms have aired their concerns at the obligations which face them so I have read with interest Samantha Barrass’s comments above but also her speech at the Risk Management conference last week. I agree with her that the SRA have done a lot (certainly more than they have done previously) to get their messages across and to help firms prepare for OFR but I cannot help but feel that there are some conflicting messages being given out which simply leads to more confusion. On the one hand, we have heard from the SRA that if firms were compliant under the old rules, then they will be compliant under the new whilst last week, Samantha Barrass seems to suggest that this might not be the case if there is too much “unthinking compliance”.
    Even in well managed firms, COLPs and COFAs will have much to do to prepare for their reporting obligations with very little guidance as to what is a reportable breach or not. Again, on the one hand we have the word “material” breach in the Authorisation rules (with a small amount of guidance in the notes – which incidentally those present at our meetings did not find particularly helpful when thinking about the practical situations that arise on a day to day basis) whilst on the other, Chapter 10 of the Code requires reporting of “serious” breaches of the Principles, outcomes etc. Should COLPs and COFAs treat these 2 words differently (and if so, how?) or do they effectively amount to the same thing?
    The SRA ethics helpline have not been able to answer that last question for me – the person I spoke to told me that they had raised this difference in wording in their training as a question that many firms would raise and yet there has been no clarification. FAQs which the SRA have started to include on their website will hopefully help and I agree with Brian that open and constructive dialogue will be key.

  8. Michelle Garlick on December 15th, 2011 at 12:54 pm
  9. This blog and the debate highlight the SRA’s strategic perspective and how operationally Law Firms need more support from them. The orginal blog was written after a joint presentation (Michaela and myself). The views were Michaela’s but no doubt informed by our joint conference and the questions that arose.

    The SRA did alot to get their startegic aims across the profession. Indeed the response does exactly that once again. We focused on operational issues.

    Law firms are focused on operational matters and whilst they need an aware of the SRA’s strategic approach they want clear and effective guidance on operational matters.

    The feedback I have encountered shows they did not achieve the operational element – I say that as someone who has presented to hundreds of Managing Partners, Senior Partners and other lawyers over the last two and half years about the Legal Services Act 2007, ABS and OFR. I have also spoken at conferences and been interviewed and written articles on the topic – always focused on the operational element I felt was missing by the regulators (in fairness this very a wider point and aimed not just at the SRA but all of them – new and old).

    At the SRA events their speakers raised some of the issues and concerns raised by the orginal blog. This makes the defensive nature of the response all the more disappointing. A chance to point the profession to appropriate guidance has been missed.

    OFR is a huge and fundamental change – hence the wide number of courses on it. Hence the debate and concern on how to “get it right” as almost all firms strive to do.

    The appointment of COLPs and COFAs continues the pace of change next year.

    Firms need to adapt to change and that was the message of the talk we did which lead to the blog by my fellow presentor. Between the two of us we debated some of the effects due to lack of clarity in the SRA’s documents.

    Incidently, we did not always agree as somethings are just unclear operationally!

    No doubt in time these teething issues will work through the system and be ironed out but ask:

    1. At what cost to the SRA?
    2. At what cost to regulated entities?
    3. At what cost to regulated individuals?

    Compilance for law firms has never been more complex – and the Law Societys response is numerous guidance, books, courses etc to try and help. The SRA may feel this is beyond their resources and remit but the lack of operational support has frustrated the profession (including those I spoke to and heard speak at the SRA own events).

    Finally, below I have cut and pasted a Law Society event (in which I have no commercial interest) to make the point operational support and compilance clarity is not something the SRA have achieved.The course costs hundreds of pounds – how is that appropriate for smaller practices who want to comply and need help?

    Law Society Course.

    “Thursday 6 October 2011 heralded the SRA’s outcomes-focused and far less prescriptive approach to regulation. The changes require every firm to look at how they run their business and whether their systems and procedures are appropriate and effective. Principle 8 states that it is now a requirement to ‘run your business or carry out your role in the business effectively and in accordance with proper governance and sound financial and risk management principles’, while principle 7 requires that you ‘comply with your legal and regulatory obligations and deal with your regulators and ombudsmen in an open, timely and co-operative manner’. You are therefore required to not only run your practice with robust business and risk management principles in mind, but also be able to evidence to the SRA what you have put in place. To facilitate this new reality, the SRA has created two new compliance roles.

    By 31 October 2012, every firm must appoint a compliance officer for legal practice (COLP) and a compliance officer for finance and administration (COFA) (individuals with the appropriate skills may hold both roles) to ensure that firms have senior members of the team making compliance a top priority for their firm.

    Applications for these officers must be submitted to the SRA by 31 March 2012.

    Why attend?
    This one-day masterclass will cover:
    • the new regulatory regime – an overview of outcomes-focused regulation
    (OFR) and risk-based regulation (RBR);
    • how COFAs and COLPs are designed to support OFR and RBR;
    • appointing a COFA and COLP – what you need and what to expect;
    • the Law Society’s plans to support you in your role – help is at hand;
    • for legal disciplinary partnerships, alternative business structures
    and sole practitioners – ways to comply; and
    • what to do if things go wrong – ensuring continuing compliance.

    Who should attend?
    This training course is suitable for:
    • risk and compliance partners/general counsel;
    • risk and compliance managers (non-partner);
    • risk and compliance officers;
    • claims and complaints officers and/or money laundering reporting officers;
    • practice managers;
    • managing partners;
    • finance directors;
    • compliance officers for legal practice (in waiting); and
    • compliance officers for finance and administration (in waiting).”

    After this course (and those of its ilk) firms need to plan and implement the necessary systems, processes and train staff. A huge operational task.

    I could of course have picked the back cover of any of the numerous various books etc whihc have been published to make the same point – operational guidance is coming at a high cost for firms (smaller firms in particular).

    Hopefully this debate will lead to further consideration of the operational issues facing law firms. Practical and operational courses by the SRA are not only needed but they would be welcome.

  10. Paul Bennett on December 16th, 2011 at 10:20 am
  11. As to Ms Barrass’s statement:

    Judex non esse testis in propria causa

  12. Paul Murden on December 16th, 2011 at 9:26 pm

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