Just three alternative business structure (ABS) applicants made it through to the decision phase over the past six months, with 167 still going through the application process, new figures from the Solicitors Regulation Authority (SRA) have shown.
Its third-quarter performance report revealed that it received just one completed stage 2 application during those three months, along with a further 55 incomplete application forms.
In the second quarter of 2012, there were only two completed applications, with a further 76 incomplete forms submitted. In the first quarter of 2012, when the SRA opened its doors to applications, 72 completed forms were received.
An application is deemed complete when the SRA says it has enough information from the applicant on which to base a decision and then invoices for the application fee. This is the point at which the SRA has six months – extendable by a further three months – to decide whether to grant the licence.
There is no time limit for the period between submitting the stage 2 application and it being accepted as complete.
With 39 ABS licences now issued – including five for Irwin Mitchell – it means there are 167 applications working their way through the system, including several that must be close to a decision.
The SRA report said: “The number of interested applicants continues to grow, which is encouraging for the long term growth and competition within the legal services market. The majority of applications involve firms which are already regulated, with only a minority being non-regulated or new start up firms.
“The personal injury market remains a particularly popular area for investment. We are seeing interest in licensed body status from other professional practices and look forward to being able to grant licenses in this area of the market. We continue to engage with all types of applicant as part of our pre-application engagement activity.”
In other statistics revealed by the report, the number of firms shut down by the SRA in the year to 30 September fell by more than a third on the previous 12 months, from 61 to 39, while the level of outstanding claims against the Compensation Fund – which provides redress for clients who have lost money due their solicitor’s dishonesty or failure to account – continues to fall sharply. It is now £88m, having reached a peak of £225m at the end of 2011.
The performance report also updated the current position on the roll-out of supervision. There are currently 2,850 firms/entities assigned to a named supervisor and 197 assigned to a relationship manager. The remainder are subject to oversight and monitoring plus engagement via thematic work.
There are four current themes:
- Equality and diversity – the SRA is undertaking a programme of 100 visits to a sample of firms to gain a better understanding of the embedding of principle 9 and chapter 2 of the Handbook and to identify barriers and obstacles.
- Financial stability – the SRA is identifying and writing to firms that may be facing financial stability issues, undertaking targeted visits where appropriate.
- Conveyancing – the SRA has completed 100 visits to a sample of firms carrying out predominantly conveyancing work and is in the process of looking at the outcomes of those visits, with a report due this year.
- Stamp duty land tax (SDLT) – the SRA has engaged with firms that have worked on or continue to undertake SDLT mitigation schemes. The SRA has previously published an SDLT warning notice, which includes a list of some of the factors which may be relevant in a firm deciding if a SDLT scheme is in the interests of the client(s).