SRA Fines
The Increasing Cost of Non-Compliance
Increase in SRA Fining powers.
On the 22 July 2022, the Ministry of Justice increased the SRA’s fining powers from £2,000 to £25,000 for “Traditional” firm and the solicitors who work in them. The SRA can already impose fines on Alternative Business Structures of up to £250 million and £50 million for individuals.
The SRA has unlimited fining powers for Solicitors and their firms who are found to be involved in Financial Crime or Strategic Lawsuits against Public Participation (SLAPPS).
The SRA now want the power to make unlimited fines on all cases of serious misconduct. There was a further call from the SRA at the beginning of August 2023 after the Daily Mail sting on Immigration Lawyers.
If the SRA’s fining powers are unlimited for all serious misconduct it will dramatically change the disciplinary landscape and increase risk for all Firms. The risk is already high.
Recent SRA Decisions
The SRA are flexing their new fining powers:
- £20,000 –
A small two partner firm was fined £20,000 by the SRA for anti-money laundering (AML) Compliance breaches.
There was no practice wide risk assessment even though Conveyancing was 75% of their fee income. There was also a lack of independent audit function, failure to provide a partner with AML training and a failure to check source of funds.
- £15,000 –
A solicitor from a Bridgend firm failed clients subject to a deputyship order. It was found he did not manage their financial affairs or protect money or assets.
- £12,000 –
A solicitor failed to advise on conflicts of interest in commercial property transactions.
- £7,500 –
A Manchester PI firm failed to have direct contact with their clients who were introduced by a CMC (for 6 years!).
- £9,000 –
A solicitor was fined for allowing client account to be used as a banking facility. The COLP was also fined £9,000 as he was aware of the agreement.
- £3,500 –
Failure to comply with the Transparency rules, did not publish details of costs for motoring offences or the complaints procedure. Failed to display the SRA digital badge.
These are all decision from 2023 and the Firms or Solicitors had to pay SRA costs as well as the fine.
The Fall Out
In addition to the direct financial costs there are many other consequences for you and your business.
Professional Indemnity Insurance.
Your premiums could increase, your existing insurer could refuse to renew, and it may be difficult to find new cover.
Reputation
The SRA usually publishes their decisions, and you could find yourself or your firm in the Legal Press for the wrong reasons. There could be reputational damage and difficulties attracting new business.
Accreditations
Will this affect your CQS or Lexcel accreditations? If your CQS accreditation was lost or suspended, will you lose you conveyancing panel membership?
How we can help
The risk of non-compliance is real, serious and costly. We can provide:
- A comprehensive compliance and web-site health check. A thorough look at your policies and procedures with solutions for any non-compliance.
- Technical compliance support on an ad hoc or retainer basis. This will give you direct access to compliance professionals.
- Complaint handling and assistance with the Legal Ombudsman (LeO) We can investigate the complaints, make recommendations and draft your complaint response. We have years of experience of dealing with Le0.
- Compliance training – one off training courses and comprehensive training programmes. We can help you comply with the SRA’s continuing competence requirements.
- File reviews and audits – detailed and in-depth reviews in accordance with the SRA supervision requirements.
- Bespoke Compliance policies, procedures and templates.
- Assistance with Lexcel accreditation and visits
- Anti-Money Laundering (AML) – a review of procedures and policies update
- Transparency rules – Are you publishing the correct costs and complaints information?
- GDPR and the ICO – including managing data breaches and SARs.
- Advice on PII renewal
- Assistance with SRA investigations and prosecutions
- Merger and Acquisitions- assessment of regulatory compliance issues and due diligence.