The Solicitors Regulation Authority (SRA) is “moving into the enforcement phase” for firms which have failed to appoint compliance officers.
Around three per cent of the 10,000 law firms regulated by the SRA are expected to be affected.
All law firms are required by the regulations to nominate a compliance officer for legal practice (COLP) and a compliance officer for finance and administration (COFA). The new roles are part of the move by the SRA to outcomes-focused regulation. Firms were expected to nominate the compliance officers by 31 July 2012 and have them in post from 1 January 2013.
“We must now switch our focus to proportionate enforcement action against those firms that have refused to nominate or otherwise failed to engage appropriately with the process,” said Samantha Barrass, SRA Executive Director. “Action will be taken against both firms and individuals, and will range from letters of advice, fines, rebukes, through to revocation of authorisation, and referral to the Solicitors Disciplinary Tribunal.”
James Burgoyne, Director Brunel Professional Risks advises law firms to think carefully about the liabilities faced by COLPs and COFAs. “Compliance officers in law firms are in a highly responsible position and could find that regulatory action is taken against them where they fail to meet their responsibilities. Law firms have had to assimilate a challenging paradigm shift in regulation. Insurance and financial firms faced a parallel challenge a number of years ago in complying with the FSA’s principles based regulation. We can help to advise firms on putting effective risk management procedures in place to ensure that compliance officers can fulfill their roles.”
The SRA’s press release on enforcement action is available here. A Law Society practice note on appointing COLPs and COFAs is available here. A recent report on the issue appeared in the Law Society Gazette.
