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The difficulties that OFR poses to the profession and the difficulties that the SRA has in delivering on its promise of ‘Freedom in Practice’ have already begun to manifest themselves after only a month since the SRA’s Handbook 2011 was implemented.
Advising legal practices on their regulatory duties is never an easy task even when they ask for help. Generally they gratefully receive detailed and assertive advice and then struggle to actually do anything with it.
So when firms are posed with a decision that cannot be made for them they have faltered and done nothing!
The amendment to Rule 22 of the SRA Accounts Rules 2011 has proved a prime example. Firms are now given the option to move away from the rigid rules on paying interest on client money and to adopt a policy that is ‘fair and reasonable’. Of course, when asked what is ‘fair and reasonable’ nobody can give a definitive answer about how the Solicitors’ Regulation Authority will interpret that provision or what they consider to be ‘fair and reasonable’. It is a matter of opinion and interpretation with no precedent to rely on except the previous rules.
So, in order to avoid putting their heads above the parapet, most firms have continued to do exactly the same as they did before despite entrepreneurial ideas and intentions. Freedom in Practice has yet to materialise in practice.
That is because, in spite of the SRA’s PR campaign and its promise to take a more common sense and proportionate response to enforcement under OFR, most firms do not trust the SRA.
Even if the SRA does live up to its promise, something which many doubt due to the dramatic shift in culture required, trust from the profession will only be achieved by firms interacting and experiencing the SRAs enforcement strategy first hand.
With the SRA reportedly in disarray in terms of its enforcement and supervision functions, it is unlikely, for a number of years anyway, to be able to actively engage with a sufficient number of firms in a manner that will allow those firms to feel more comfortable with its enforcement strategy.
So the relationship of trust that the SRA admitted underpins their enforcement strategy under OFR is unlikely to materialise any time soon. In the mean time, legal practices and compliance commentators are left to wonder whether the SRA will live up to its promise and many firms will be unwilling to take the risk of doing anything different that could incur the SRAs previous overzealous regulatory enforcement.
OFR requires trust in the regulator in order to be effective. Until that trust materialises, many firms will not venture into the brave new world and Freedom in Practice will remain a well intentioned notion.
Client Relationship Manager
T: 0845 056 3949
M: 0743 727 4046
The Law Society has issued a practice note about the risks to solicitors posed by this new legislation, which came into force on 30 September.
The SRA has urged all practices to check HM Treasury’s consolidated list of asset freeze targets, which lists designated persons subject to financial sanction under EU or UK legislation.
The practising certificate renewal period opened on Monday 2 October.
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