Industry News

Compliance Plans – Causing Despair for Sole Practitioners

24 November 2011

Following the introduction of the new SRA Handbook 2011 last month, firms are now required to develop a Compliance Plan in accordance with the SRA Authorisation Rules 2011. The purpose of this plan is to get firms to a) decide, and b) demonstrate, how they intend to comply with the SRA Handbook 2011. Sound like a good, sensible idea? For some maybe, but for Sole Practitioners in particularly, developing a compliance plan is enough to make them want to shut up shop.

A compliance plan, if developed well, should identify 3 things:

  1. Key compliance issues/areas that the firm needs
    to comply with;
  2. Procedures and policies that the firm has/will
    have to ensure compliance with the above;
  3. Who in the firm will take responsibility for
    ensuring that the above is effective and that the firm is compliant?

In many firms which have numerous owners the majority of compliance issues will be the responsibility of the nominated officers i.e. the Compliance Officer for the Legal Practice (COLP) and the Compliance Officer for Finance and Administration (COFA). While the owners of the firm will remain responsiblefor the firm’s compliance, much of the time consuming work; recording, monitoring, reporting risks and breached will be undertaken by the Compliance Officers. Therefore, the compliance plan will document each person’s responsibility and the tasks will be divided according to roles held. Great, that sounds manageable – but what happens when you do not have anybody to appoint for the roles of compliance officers?

Compliance officers need to be of sufficient seniority and have sufficient responsibility within the firm in order to gain approval from the SRA. This includes having access to all management systems and arrangements and business information. How many Sole Practitioners have people who fit this bill? The answer: very few!

As a result, Principal’s will be taking on the roles themselves. The compliance plan of many sole practitioners will consist of a
long list of responsibilities all with the Principal’s name next to them.  Principals will be burdened with all of the duties of the Compliance Officers, along with running their business and most importantly fee earning work to earn a living! The aim of Outcomes Focused Regulation was supposed to be to protect clients but now with all of these extra jobs it is hard to see when a Sole Practitioner will have the time to do any substantial client work and how the burden of all of these jobs will not impact of the quality of service that Sole Practitioners can provide.

Section 5 ‘The Role of the COLP and COFA in smaller practices’ of the Law Society’s Practice Note ‘Compliance Officer’ states that the roles can be fulfilled by the same person and then suggests that this may be more appropriate in smaller firms. How can it be appropriate for one person to have so many roles and still be expected to do there primary job of client work? Many Sole Practitioners’ Compliance Plan will soon document them taking the role of; Principal, COLP, COFA, Money Laundering Reporting Officer, Complaints Handler, SRA contact, the list could go on.  Not to mention if the firm has achieved or is
working towards any quality standards in which case they could be taking the role of Senior Responsible Officer (Conveyancing Quality Scheme), Risk Manager (Lexcel) etc.

Ian Braithwaite
Client Relationship Manager

T: 0845 056 3949
M: 0743 727 4046

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