SRA: lower level of non-compliance than expected

Nearly 90% of firms had their compliance officers in place for the start of the new regime yesterday, with the rest either yet to have their nominations approved or, in the case of 194 firms, failed to complete the process at all.

However, the Solicitors Regulation Authority (SRA) said those without compliance officers for legal practice (COLPs) and for finance and administration (COFAs) on 1 January will not have their authorisation automatically removed.

Individuals at more than 8,800 firms were approved to take up their roles as from yesterday, representing around 89% of the nearly 10,000 firms who are required to appoint compliance officers.

The SRA said the number of 1,000 or so firms that do not yet have compliance officers approved is “significantly lower” than it anticipated a few weeks ago.

SRA director of risk Andrew Garbutt said: “There are some firms which came very late to the process, or who delayed providing us with further information when required to do so; consequently these have not yet received notification of our decision concerning the nomination.

“In cases where we now have all the information we need, I anticipate we will be able to make a decision shortly. We are making every effort to ensure firms and individuals know the status of their nominations.

“The SRA’s continued focus in the early part of January will be to continue to work with firms to complete the approvals process, wherever this is possible. However, despite repeated requests, there remains a number of firms who have not co-operated with us. In these cases, we will begin the appropriate level of enforcement action, including revocation of their authorisation.”

The SRA said that although it is a requirement for all firms to have approved compliance officers in place from 1 January, firms and individuals who did not receive their approvals by then will not be subject to an automatic loss of authorisation.

The revocation of authorisation on the grounds of non-compliance with rule 8.5 of the SRA Authorisation Rules 2011 (i.e. failure to have compliance officers in place) requires a positive process, initiated by the SRA.

Meanwhile, the first task of the new compliance officers will be to get to grips with version six of the SRA Handbook, which went live yesterday. The amendments mainly concern the recent decision to change the approach to referrals for financial services advice, and ensuring the Compensation Fund covers alternative business structures.