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I was moved to contribute some observations on regulation following a discussion with a solicitor client pulling their hair out at the delays in the Solicitors Regulation Authority investigation process; and having read Gregory Treverton-Jones QC’s article on the dangers of entity regulation.
For the regulator’s enforcement strategy to gain the trust of the regulated community, it requires a cultural deviation from (as is perceived throughout much of the profession) investigators and caseworkers conducting a ‘mud-slinging exercise’ against anyone and everyone to whom ‘rule breaches’ might stick, rather than investigating ‘misconduct’.
It should also be made very clear that the dangers associated with misguided regulator enforcement, including entity regulation, are not limited to actual sanctions or disciplinary action. They extend to the extreme detriment caused to smaller firms in particular by the lack of progress or communication inherent within the investigatory process.
The simple indication of possible enforcement against an authorised body or a number of individuals within the practice to whom little or no personal blame can be attributed for another individual’s misconduct invariably causes the entity to stagnate. It is unable sensibly to invest in the future; unable to achieve necessary quality marks such as the Conveyancing Quality Scheme or Lexcel; uncertainty is created over the professional indemnity market; and staff are led to consider leaving the practice to distance themselves from a potentially sinking ship. Such detriment would not occur if investigatory action was limited to the actual misconduct rather than technical breaches of the rules by an entity or manager.
No one will begrudge the SRA adequate time to fully investigate allegations of misconduct and risks to the public. However, it is incredible that, following a very thorough investigation during which a practice and all of the individuals involved cooperate and admit the breaches, the practice and partners should be waiting (in the aforementioned solicitor’s case) seven weeks for any correspondence from a case worker, let alone a decision about whether or not the matter will be pursued.
The board-level policies of ‘common sense’ and ‘risk-sensitive enforcement’ must be applied throughout any investigatory processes. Such investigations should be dealt with efficiently and with a degree of sympathy for ‘blameless’ individuals who are caused serious detriment simply due to their practice being subject to an investigation.
Only when a commonsense enforcement approach is accompanied by a clear and efficient investigatory process will the SRA gain the trust of the profession. Until then the profession will remain wary of inviting SRA investigations through self-reporting, regardless of the risks of actual enforcement actions. The SRA has a long way to go to convince the profession that entity regulation will be utilised with such sympathy and proportionality and must seek to change the culture at the supervision and investigatory level of interaction with solicitors.
This article has been published in the Law Society Gazette –http://www.lawgazette.co.uk/in-practice/practice-points/039commonsense039-regulation
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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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