SRA consults on the future of regulation

Responses invited to consultation: transforming the SRA's regulation of legal services

The Solicitors Regulation Authority (SRA) today launched a consultation paper setting out the timetable for implementing Outcomes-Focused Regulation (OFR). All those with an interest in the future of legal regulation are urged to respond to the consultation so that the changes can be implemented as successfully as possible for consumers and providers of legal services alike.

This consultation forms part of "Freedom in Practice: Better outcomes for consumers", the SRA's dialogue with consumers and providers of legal services into the changes effected by the Legal Services Act 2007.

The SRA recognises that the current rulebook is detailed and prescriptive. The new regime will be more effective, proportionate and targeted, and the SRA will spend less time dealing with low-level matters, allowing a focus on the things which matter most to consumers. It will also help to build a more productive relationship with providers of legal services, with a firm focus on service for clients.

Flexibility, not lower standards, will be the keynote of the new regime, and firms which flout compliance will face tough sanctions.

The SRA's approach to delivering OFR will include

  • working with firms to focus on acting in a principled manner to deliver good standards of service to consumers, rather than compliance with detailed rules;
  • analysing the potential risks faced by consumers and taking proactive action when necessary;
  • ensuring legal services are delivered by principled, competent firms and individuals;
  • encouraging firms and individuals to tackle risks themselves, allowing us to concentrate on those who cannot, or will not put things right;
  • taking effective, fair and proportionate enforcement action to create a credible deterrent;
  • concentrating resources on dealing with those firms which pose a serious risk.

We will use information from a wide range of sources to assess risk, including additional information from firms, market research and analysis of broader economic and sector developments, information from consumers and third parties and sources of intelligence.

When risk is identified, the SRA will work constructively with conscientious firms to put things right, using tools such as letters to managing partners, remedial plans for individual firms and unannounced visits, but taking robust enforcement action where there is a serious or persistent risk.

Under the new system, firms and individuals will take responsibility for managing risk and exercising judgement on how to deliver good outcomes. Firms which do this successfully will then be left in large part to get on with running their businesses.

This will require a high degree of confidence between the SRA and firms. The SRA is working hard to build this confidence by increasing its capacity in key areas such as risk analysis, ensuring a robust governance structure across the SRA, and enhancing its commercial awareness.

This consultation on the roadmap is part of the SRA's programme to ensure that OFR and alternative business structures (ABSs) are implemented successfully. A draft of the new Handbook will be published for consultation on 28 May 2010, with a second consultation in October 2010. The new Handbook will be published in April 2011 and come into force the following October.

SRA Chair Charles Plant said:

"'Freedom in Practice: Better outcomes for consumers' will allow the SRA to implement OFR and ABSs in a way that works for clients and practitioners alike. To help us to transform regulation we need to hear the views of all of those with an interest in the future of legal services. Our consultations, our dedicated Freedom in Practice website, and our programme of roadshows for the profession will help us to achieve that.

"We want to bring in a regulatory system which allows good firms greater flexibility in how they run their businesses. Firms will have to comply with broad principles, but they will be able to choose how they do this. This is not light-touch regulation, however. Firms which will not or cannot fulfil their responsibilities will face tough sanctions.

"A flexible market will allow firms to innovate to provide the best legal services to consumers. The SRA will support firms to make this vision a reality."

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