For an explanation of our risk-based approach to regulation, please see the Regulatory Risk Framework.
Below is a series of questions and answers that we will continue to build upon over time.
Questions and answers
Q1. How does the SRA decide which reports require action?
A. We accumulate a huge amount of information about the regulated individuals and bodies in our daily work. It comes from a wide range of sources, including our own dealings with firms themselves, clients, media review and from other solicitors.
All incoming reports are risk-assessed to inform prioritisation and action. For example, a report, series of reports, or information from the police may identify that there is an issue that needs to be addressed immediately. If this is the case, we will apply the resources necessary to address the situation and take effective action in accordance with our overall policies and proportionate to the issue that has arisen.
Our incoming reports risk assessment methodology sets out how we will risk assess incoming reports.
All relevant information gathered by the SRA is recorded and available to inform further risk assessments at individual, firm, sector and market level.
Q2. Why is the SRA interested in the risks posed by firms and individuals?
A. By assessing the risks inherent in any particular firm and the individuals within it, we can decide what level of resource needs to be allocated to it. As a risk-based regulator, our allocation of resource should be proportionate to the risk that a firm presents to us achieving the regulatory objectives.
Our Regulatory Risk Framework outlines our approach to managing risks posed by firms and individuals.
Q3. What does it mean if a firm has a large footprint?
A. A firm’s regulatory footprint is a numerical proxy for the firm’s potential to impact upon the regulatory objectives. Footprint takes into account attributes such as firm turnover, client money held, number of fee earners and type of work undertaken.
The assessment of firm’s footprint is not a measure of the quality of the firm.
Successful, innovative firms delivering high-quality legal services can be assessed as having a large footprint, affecting a need for us to actively regulate the firm's delivery of a business model, the failure of which has the potential to impact on our achievement of the regulatory objectives.
We use the firm’s footprint to allocate a suitable supervisory approach to the firm to each firm. This is in recognition that a one-size-fits-all approach is not appropriate to the range of firms delivering legal services to consumers.
Q4. Will firms be told what their risk score is?
A. At the moment, there are no plans to tell firms what their risk score or risk rating is. The "risk score" will, of course, fluctuate, and in isolation will not be informative, but a firm will know the level of engagement we believe is proportionate to the risks presented by them based on our assessment.
Q5. Will this mean that the SRA will be increasing the amount of information firms must provide?
A. In time, yes. But, we recognise the time and cost associated with the provision of data to the SRA and therefore regularly assess the relevance of our regulatory information to ensure that we are being proportionate in imposing information requirements on those we regulate, whilst securing sufficient data to inform accurate and timely risk assessment.
Q6. What about SRA operational risks?
A. The SRA makes a distinction between operational and regulatory risk. Operational risks generated by the SRA’s activities, including our activities to control regulatory risks, are identified and managed separately to the regulatory risks cause by the market that we regulate and other external factors. The Risks that we manage under our Regulatory Risk Framework are listed in our Regulatory Risk Index.