SRA to step up action over non-compliance with transparency rules

Philip: Staged review of websites

The Solicitors Regulation Authority (SRA) is to take a “more robust approach” to enforcing its transparency rules after its latest work indicated widespread non-compliance.

The rules have now been in place for four years and an update from SRA chief executive Paul Philip to its board’s meeting earlier this month said work on their enforcement has recommenced.

He wrote: “We are undertaking a staged review of the websites of approximately 2,500 firms that previously provided declarations that they were complying with the rules. We have undertaken an initial review of 500 websites, and this has indicated a continued low level of full compliance.

“Whilst we remain committed to engaging with firms and supporting them in the achievement of full compliance with the rules, it is recognised that this must be alongside continued regulatory enforcement.

“Therefore, given the rules have now been in force for coming up to four years and the fact that this group of firms have previously provided a declaration of compliance, we intend to take a more robust enforcement approach.

“Longer term we will also be looking to utilise the proposed new fining powers as part of this enforcement exercise.”

In a press briefing yesterday, Mr Philip explained that this would take the form of the new fixed penalty notices and then fines for persistent offenders – with its fining power now reaching £25,000 rather than £2,000.

There were broadly three groups of solicitors, he added: those opposed to the rules in principle – although these were “few and far between” – others who were trying but not hard enough to comply, and a final group who were trying but not understanding what they had to do.

Mr Philip said: “We had a discussion about whether the rules were too complicated or not easily understandable – there’s always an argument for that. But [these are] lawyers, who are used to dealing with detailed propositions and it’s not that detailed.”

Meanwhile, the SRA board confirmed that it would press ahead with a new rule placing a regulatory obligation on firms and managers to challenge colleagues who treat others unfairly or without respect.

The board said in October that it was “minded” to make this rule but members wanted to see the accompanying guidance first. This has now been done and the board approved a new standard in section 1 of the code of conduct for solicitors.

This says: “You treat colleagues fairly and with respect. You do not bully or harass them or discriminate unfairly against them. If you are a manager you challenge behaviour that does not meet this standard.” There is a similar provision in the firm code

The following will be added to the introductions of the codes to ensure the SRA’s reach can extend beyond the workplace: “Conduct does not need to take place in a workplace in order to relate to your practice – these requirements capture conduct which touches realistically upon your practice of the profession, in a way that is demonstrably relevant.”

The meeting also discussed a proposed Labour amendment to the Economic Crime and Corporate Transparency Bill, which would make the SRA the default supervisor for any independent legal professionals not regulated by another anti-money laundering supervisor.

Mr Philip warned: “This would require us to supervise lawyers (non-solicitors) offering non-reserved legal services (for example will writers offering tax advice) that aren’t currently regulated for anti-money laundering purposes.

“We would need significant legislative changes to allow us to authorise, supervise and charge fees to these types of firms should this come to pass.”

Finally, the board agreed that non-practising solicitors who want to stay on the roll will have to pay an administration cost of £20 per year when the SRA resumes the keeping of the roll exercise next year for the first time since 2014 – when it was also £20.

This has been “calculated to incorporate the upfront expenditure of the work, including the IT development and all operational costs to run the exercise”, Mr Philip said. Some 60,000 solicitors will be contacted as part of this.

He stressed that the SRA would not make, and was not looking to make, a profit from the work.

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