Barrass: risk-based approach to checking nominations
Law firms will be able to start nominating the compliance officers for legal practice (COLPs) and for finance and administration (COFAs) at the end of May – but the Solicitors Regulation Authority (SRA) has admitted they may not all be approved by the start-date of 31 October.
Speaking in London yesterday, SRA executive director Samantha Barrass said the delayed nominations process would begin on 31 May and close on 31 July.
Unlike the detailed approach to COLPs and COFAs of prospective alternative business structures, the SRA will not check every law firm nomination.
She said the SRA will take a risk-based approach, going back to a subset of firms, largely on a risk basis, but also those that are highly complex and some on a random basis, “to check that sensible judgement has been exercised by the firm”.
Dedicated phone support will be available to firm managers and nominees seeking advice.
Ms Barrass said: “We expect to confirm most COLPs and COFAs by the end of October, consistent with the overall timetable, although we may need to accommodate some late approvals of COLPs/COFAs, and we are currently considering this.” The Law Society had called on the SRA to defer the process for smaller firms.
Firms will have to complete a short web-based nomination form, based on binding declarations by both a senior manager with authority to sign on behalf of the firm and the COLP and COFA nominees, for which the signatories will personally be held to account by the SRA. There will also be declarations relating to the suitability test.
The COLP/COFA will have to declare that they understand their obligations and have sufficient responsibility in the firm and are in a position of sufficient seniority to perform the role; they are satisfied that the firm’s managers have put in place suitable arrangements to ensure that they are able to discharge the COLP/COFA duties in accordance with the rules; that they will take all reasonable steps to ensure compliance; and that they consent to being designated as the COLP/COFA.
The firm signatory will have to confirm that it has suitable arrangements in place to ensure that the COLP and COFA are able to discharge their duties, and that the COLP and COFA declarations are correct.
Ms Barrass said the aim of the compliance roles is to place the primary responsibility for managing compliance risk with the firms, with particular responsibilities for the most senior people in firms. “It encourages the development of a strong proactive compliance culture in firms by creating a clear formal focus for delivery of the regulatory outcomes in each firm, increasing the chances that the vast majority of firms will identify and deal with regulatory risk.”
She stressed that whilst COLPs and COFAs are the formal focus points for compliance, they will not be seen as sacrificial lambs. “Senior managers will be held to account and will not be able to absolve themselves of their responsibilities. The intention is to create a firm-wide culture of compliance.”
