Townsend: compliance officers key to outcomes-focused regulation

Around 750 law firms have failed to meet the 31 July deadline for nominating their compliance officers, the Solicitors Regulation Authority (SRA) has reported.

It said that more than 93% of the 11,304 registered firms have either completed, or are in the final stages of completing, the process for nominating their compliance officer for legal practice (COLP) and for finance and administration (COFA).

In a statement, the SRA said: “During August, the SRA will be engaging with those few firms that have not yet nominated a COLP or COFA, to resolve any difficulties they have had in meeting the deadline.”

Speaking to Legal Futures last month, SRA executive director Samantha Barrass said the decision on “how much of a stick will be wielded” with firms that have not met the deadline will depend on whether firms have begun but not completed the process, or have not engaged with it at all.

She emphasised that making the nomination is a regulatory requirement, while failure to have a COLP and/or COFA in place for 1 January 2013 will be a breach of the SRA’s authorisation requirements.

For those that have submitted their nominations, the SRA will now assess those who have been put forward.

Unlike the detailed approach to COLPs and COFAs of prospective alternative business structures, the SRA will not check every law firm nomination. 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”.

COLPs and COFAs are responsible for ensuring firms have systems and controls in place to enable them to comply with regulation. While responsibility for this compliance rests with the firm, its managers or the sole practitioner, the compliance officers must ensure compliance, and are responsible for recording and reporting failures in compliance.

SRA chief executive Antony Townsend said: “When we introduced outcomes-focused regulation, we moved away from the focus on prescribed rules to concentrate on what outcomes we want for the consumer and for the sector as a whole. The appointment of COLPs and COFAs is key to this new regime and we’re delighted to be in the position of assessing nominations.”

 

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