SDT: SRA opposed removal of condition
The Solicitors Disciplinary Tribunal (SDT) has removed an “otiose” condition imposed last October on a director of a law firm that prevented him from holding a compliance role.
The Solicitors Regulation Authority (SRA), which strongly opposed the move, argued that the restriction on Francis Mathew was necessary because his compliance failures, which included widespread accounts rule breaches and anti-money laundering (AML) shortcomings, were “very serious”.
Mr Mathew and his East London firm Law and Lawyers Limited were each fined £25,000 after he was found to have taken a “cavalier attitude” to his regulatory obligations, recklessly telling the SRA that the firm had an AML risk assessment when it did not.
The solicitor, admitted in 2004, was a director with “significant control” and held all the compliance roles.
The SRA uncovered a failure to undertake accurate reconciliations of client account, a client account shortfall of over £40,600 arising from 423 matters, and residual balances across 1,786 matters totalling over £287,800.
The SRA reviewed AML documents on 15 conveyancing matters, 12 of which had “issues” and included three transactions funded by third parties in China.
Counsel for Mr Mathew said the firm had “more than enough funds” to clear the client account shortfall and £88,000 in residual balances were donated to charity. Neither the solicitor nor his firm obtained any profit from the rule breaches.
Mr Mathew applied in February to remove the condition preventing him from being a COLP, COFA, or a money laundering compliance or reporting officer.
His KC argued that the restriction was “of no protective effect” because Mr Mathew was not a compliance officer, had no intention of becoming one and, even if he did, would in any case require the permission of the SRA.
The restriction was “otiose” but had “unintended and adverse consequences” in that Mr Mathew was being prevented from acting as a solicitor.
“One lender had already insisted that Mr Mathew not do any work on any transactions relating to them. [His counsel] submitted that unless the restriction order on Mr Mathew was removed, other lenders might take similar action.”
This would “limit very substantially” Mr Mathew’s ability to practise as a solicitor and be “disproportionate”.
The SRA argued that the solicitor’s application to remove the condition was premature and if he was dissatisfied with the tribunal’s decision, the “correct route” for him to take was to appeal the decision to the High Court.
SDT guidance on such applications said relevant factors included the length of time since the tribunal’s order was imposed, the details of training undertaken, evidence of “genuine reformation of character” and character references.
The SRA said that the tribunal had assessed Mr Mathew’s conduct as “very serious”, as reflected by the fine, and if the restriction was removed, the public would “harbour serious concerns about the propriety of Mr Mathew returning to unrestricted practice”.
The solicitor had failed to provide evidence of “genuine reformation of character”, character references or evidence of training.
The SDT ruled that Mr Mathew was entitled to appeal the October decision to the High Court, but he was also entitled to apply to the tribunal for removal of the condition. It did not accept that a High Court appeal was the “correct route”, since it was merely “an option”.
It agreed that the wording of the condition, in requiring him to obtain the SRA’s permission to undertake any compliance roles, was “otiose” because he required that permission anyway before becoming a compliance officer.
The “unintended consequences” of the condition imposed on Mr Mathew’s practice were not a “determining factor”, which was “whether it remained necessary for the protection of the public and the reputation of the profession” to retain it.
“Having determined that the wording of the restriction rendered it otiose, the tribunal found that the restriction was not necessary for the protection of the public or the reputation of the profession.”
The SDT ordered that Mr Mathew’s application for removal of the restriction be granted, and he should pay £2,400 in costs.
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