SRA unveils new rules for waivers and ‘safe space’ to promote innovation

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13 April 2018


SRA: Just seven responses to consultation

The Solicitors Regulation Authority (SRA) is to simplify its system for granting waivers to regulations in order to promote innovation.

It is also formalising its ‘innovation space’, which it describes as a “safe space” which allows firms with novel ideas that may push the boundaries of the current rules to test them in a controlled way.

The innovation space, first unveiled two years ago, includes a ‘no enforcement’ tool to guarantee a firm that the SRA will take no enforcement action if innovations bring the firm into technical breach of its rules.

This would be similar to the Financial Conduct Authority’s regulatory ‘sandbox’; another example is the Civil Aviation Authority allowing Amazon to test drones for parcel delivery despite it being against the rules.

The SRA was finally responding to a consultation that closed more than a year ago, even though it only attracted seven responses, including from the Law Society, Liverpool Law Society, Winchester firm Shentons Solicitors and Mediators, sole practitioner Craig Jones, and alternative business structures Riverview Law and DAS Law.

The response said: “We are committed to helping existing legal service providers develop their businesses in new ways, and to supporting new organisations that are thinking of delivering legal services for the first time.

“We want to allow greater flexibility for solicitors and freedom for firms to innovate, compete and grow. We believe this will help to improve access to quality legal services at affordable prices.”

The SRA said a new, single set of simplified criteria for granting waivers would “help firms understand what might be possible”.

The change also removes the requirement that there be “exceptional circumstances” justifying a waiver, which the SRA said “should increase the flexibility in dealing with applications”.

A waiver would have to be compatible with the regulatory objectives set out in the Legal Services Act 2007.

The new policy explains: “The waiver sought may, in the particular circumstances, advance some of the regulatory objectives but have an adverse impact on others.

“For example, a waiver of some of our current practising restrictions may promote access to legal services by enabling services to be provided by a new business in a novel way, but arguably give the applicant a competitive advantage by removing restrictions that are generally applied.”

The general principle will be that waivers are published, unless it is “inappropriate or unnecessary”, such as if doing so would divulge commercial sensitive information.

The innovation space is for “truly innovative” proposals that cannot be handled under the waiver and authorisation processes.

The SRA said the few applications received to date “indicate that the opportunities offered by the innovation space are attractive to a range of solicitors and firms, offering varying types of legal services and for different consumer groups”.

The response said: “We recognise respondents’ views that innovation does bring with it a degree of risk. Our proposals make sure that the risk is understood at the outset and can be managed and understood appropriately. This would allow the market to develop and bring in new approaches.

“We stress to innovation space applicants that they need to inform their clients that they are operating within a specific working environment and explain what this means.

This all forms part of the SRA Innovate initiative, and the regulator promised to publish an annual evaluation report on its impact more broadly.

The SRA will be running regional events to help firms interested in innovation in Cambridge (5 June), Bristol (26 June) and Newcastle (4 July). Click here for details.



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