Decision-making criteria
Authorised body, decision to impose conditions following authorisation of
Last updated: 20
March
2012
This criteria came into effect on 20
March
2012.
Introduction
This criteria applies to decisions made in respect of imposing conditions on the authorisation of an existing authorised body.Delegated authority
This is set out in delegation [d26]
Criteria in statutory rules
The relevant provisions are:
Criteria
Separate criteria exists applicable to the imposition of conditions when considering an application for initial authorisation as an authorised body, titled 'Authorisation to provide legal services as a licensed body, decision to approve (including approval subject to conditions) or refuse application for'.
The full criteria applicable to consideration of whether an authorised body should have conditions imposed upon its authorisation are contained within the SRA Authorisation Rules. This document is supplementary to these rules, and is intended to provide clear guidance for decision-makers on interpretation of the rules. This is in order to support fair, reasonable and proportionate decisions towards the aim of ensuring the authorised body and all its authorised role holders are suitable to operate and control a business providing regulated legal services. Further information about our approach to decision making can be found in the Decision-making framework.
The decision-maker will determine whether to impose conditions, so far as is reasonably practicable, in a way which is compatible with the regulatory objectives including the objective of improving access to justice and which the decision-maker considers most appropriate for the purpose of meeting those objectives. The decision-maker will consider whether the imposition of a condition(s) is appropriate and/or necessary to achieve one or more of the purposes set out in Rule 9.1 of the SRA Authorisation Rules. In addition, Rule 14.5 of the SRA Authorisation Rules provides that the decision-maker may impose conditions on the body's authorisation at the time of approving any manager, owner or compliance officer of the authorised body.
Broadly, conditions on an authorised body will fall into two categories; those that restrict or limit a course of action and those that require a specific course of action. By way of example, these may include;
- restricting the types of activities a body may undertake
- restricting an individual's involvement in the body
- requiring the body to produce specified information to the SRA (for example, more frequent Accountant's Reports)
Aspects of decision-making
In considering whether to impose conditions on an authorised body, the decision-maker may take into account the following general considerations:
- any previous disciplinary or other record of managers, owners, employees and interest holders,
- any outstanding regulatory or disciplinary matters against the authorised body, managers, owners, employees and interest holders.
In addition, the decision-maker will be satisfied that the imposition of the proposed condition would be in the public interest.
The overarching consideration when considering whether to impose conditions on an authorisation is whether the proposed condition would eradicate or mitigate an identified risk. This includes risks that have not yet crystallised into specific events, as well as risks that have already caused adverse consequences.
The decision-maker will draft conditions ensuring that they target an identified risk. In addition, the decision-maker will take into account the effect of any proposed condition on the authorised body as a whole to ensure that it (i.e. the proposed condition) is proportionate. Conditions to undertake a specific course of action will be drafted to ensure that they are clear and practicable.
Policy
Principles of regulatory decision-making, approved by the SRA Board, provide a set of standards applicable to decisions. The principles are supported by guidelines. The principles and guidelines are written, accessible to all staff and published on the website. In addition to the principles and guidelines, the decision-maker must also take into account the potential impact of decisions on competition and human rights.
The reasons given by a decision-maker will normally include specific criteria applicable to the decision. SRA Policies relevant to decision-making are reflected in the criteria.
Case study
The example below is illustrative and does not set any type of precedent. Each matter is considered on its own facts and merits.
An authorised body registered in England & Wales has twenty five members of staff and three managers and offers legal, financial and funeral services through two offices, in London and Manchester. The company undertakes all legal services, financial services and funeral services as a multi-disciplinary practice, cross -selling work internally between the three disciplines.
The company notify the SRA that one of their non lawyer managers 'E', who is in charge of the funeral services, has recently entered into an IVA because of financial difficulties in connection with a second internet business selling funeral services owned and run only by 'E'.
A risk assessment is undertaken by the SRA and appropriate supervisory actions are taken including reviewing the policies and procedures of the company. The review demonstrates that the company is complying with the necessary regulatory arrangements, however, the decision-maker is concerned about E's financial position.
A condition is imposed on the licence that 'E' is not to be a signatory on any client account of the company and does not have the power to authorise electronic payments or transfers from any client account in accordance with Rule 9.1(i) of the SRA Authorisation Rules.