Compl-i - February 2010

Hot Topics

Regulation Overhaul

The SRA announced before Christmas that they were looking at plans to rewrite and even scrap a number of rules contained inthe Solicitors’ Code of Conduct.  This comes after they decided that the way they regulate the legal profession needs a complete reform.  They believe a move away from ‘box ticking’ exercises to principle based regulation is to the benefit of the entire profession.  It is believed that there are likely to be fewer rules and greater flexibility with unjustifiable rules being scrapped.  The SRA are also looking at regulating firms differently according to the risk they pose, and SRA visits will take on a new structure looking more at the firm’s risk management systems rather than investigating breaches of the rules. 

Fears have been expressed that this new system may cause uncertainty for the profession especially as the Code of Conduct has only been in place for just over two years.  The Law Society has voiced support for a move towards outcomes-focused regulation, but have warned it must not become ‘regulation by ambush’.  

The SRA have stated that the standards required by those in the profession will not be lowered as a result.  A consultation on the proposed changes has now been launched and we would encourage all readers to contribute their own views to this consultation. You can find the consultation in the Open Consultations section of this newsletter.

PII – An Update

The SRA announced in November that it is ‘improbable’ that a single renewal date for professional indemnity insurance (PII) will be scrapped, and it also warned that any shift to staggered renewals were unlikely to change the ‘overall dynamics of the market’. 

This comes just after the Law Society’s council voted to lobby the SRA to scrap a single renewal date for staggered renewals.

The SRA have announced that they will look into the renewals date issue although they will not be reviewing the entire scheme.

Time to Prepare

The LSB announced last month that Law centres and non-lawyer LDPs should be given a years ‘grace’ to prepare for regulation as ABSs.  It was also felt that LDPs containing non-lawyers should be given the same grace period. 

The LBS has also called upon ABS licensing authorities such as the Law Society to “adapt their regulatory regimes for special bodies subject to a core set of values”.

Suspicious Activity Reports

The Serious Organised Crime Agency (SOCA) has announced that the number of suspicious activity reports (SARs) made by the solicitors profession has fallen by more than 25% this year.  Since 2006/2007 the number of SARs made by solicitors has fallen from 11,300 to 4,772.  One of the explanations given by the SOCA is that the number of transactions has fallen during the recession.  Many of the SARs reported concerned solicitors asking for consent to carry on acting for a client. 

Solicitors who do not report SARs are leaving themselves vulnerable.  For further information on when and how to make a SAR please see the SOCA’s website.