News release

SRA Board takes further steps to deliver Regulatory Reform

The Board of the Solicitors Regulation Authority (SRA) has today (Wednesday 17 September) taken further steps to deliver its programme of Regulatory Reform.

The Board has approved changes which continue to open the market to new businesses and services and reduce the burden and cost of regulation.

These include:

  • Measures to make it simpler for multi-disciplinary practices (MDPs) to be licensed to provide legal services under SRA regulation. These measures will ensure proportionate regulation where firms deliver a range of professional services under the oversight of a number of regulators. This should encourage the development of a range of new businesses and services and increase competition and client choice in the market.
  • Changes to the requirements for accountants' reports on client accounts to make them more targeted. Firms will still be required to commission accountants' reports within six months of their financial reporting period, however only those reports that are qualified will have to be filed with the SRA. Firms that receive 100 per cent of the fees from Legal Aid work are exempt from needing to commission a report.
  • Changes to the eligibility criteria for claims on the Compensation Fund - in line with the decision made at the 2 July 2014 Board, the eligibility criteria have been changed to target help towards those consumers who most need protection.
  • Ending the annual Keeping of the Roll exercise which will mean that those solicitors who simply wish to remain on the roll will no longer need to apply and pay a fee every year.
  • Simplification of the Overseas Accounts Rules to make it easier for firms with overseas practices to meet the SRA’s requirements.
  • Simplifying the regulation of European lawyers operating in England and Wales by removing unnecessary requirements and regulatory burdens.

Further information on the SRA's Regulatory Reform programme can be found here:

Go to the Regulatory Reform pages

The SRA Board's decisions will need to be agreed to by the Legal Services Board before they can be added to the Handbook.

 

Note to editors

Board agenda

SRA Board Meeting, 17 September 2014

SRA Offices, Martin Lane, London

Public documents

Summary of the changes made

Authorising MDPs as ABSs

The SRA consulted on changes to its rules to enable the more effective operation and regulation of MDPs. This was because the existing requirements appeared to be a barrier to the development of this business model. Following consultation, the Board has decided to implement the changes which will enable non-reserved legal activities to be regulated by other professional service regulators in a SRA-authorised MDP ABS. This should make it simpler, and more attractive, for firms to create multi-disciplinary firms offering a range of complementary professional services operating under more than one regulator.

Accountants' reports

After considering responses to the consultation proposal to end the requirement for all firms holding client money to obtain, and send to the SRA, an independent accountants report, SRA Board has decided that firms will still be required to commission accountants' reports within six months of their financial reporting period. However, only those reports that are qualified will have to be filed with the SRA. Firms that receive 100 per cent of fees from Legal Aid work are exempt from needing to commission a report. Further consultation will take place over the turn of the year to make additional improvements to the reporting form, planned to come into force in April 2015. Any changes made will be part of the programme of work reviewing the Accounts Rules, which should in place for April 2016.

Eligibility criteria for the Compensation Fund

At its meeting in July, the Board decided, following consultation, to amend the eligibility criteria for the Fund to focus it on helping consumers and small businesses and to exclude larger corporate claimants. The Compensation Fund protects clients from dishonesty or a failure to account for their money by a solicitor. The changes allow the SRA to manage claims more effectively, reduce the cost of the Fund to those who contribute to it and reduce the cost of administering the Fund. The Board has now agreed more detailed rules on organisations - such as small businesses, charities and trusts - applying for Compensation Fund grants.

Keeping of the Roll

Solicitors who do not hold a practising certificate will no longer be required to inform the SRA of their intention to stay on the roll, a process that costs the individual £20. The SRA retains the right to carry out the exercise on an ad-hoc basis when regulatory need requires it. A consultation on this matter was carried out in the spring, with the majority of respondents in favour of the proposal.

Overseas Accounts Rules

The SRA is to modify the formulation in the Overseas Rules in order to clarify the exceptional circumstances in which a solicitor may conduct reserved activities from an overseas practice without requiring full compliance of that office with the SRA Handbook. This continues the work the SRA has been doing to ensure solicitors working in different jurisdictions do not need to comply with two sets of regulatory requirements - those of their "home" regulator, and those of the country they are working in.

Regulation of European Lawyers

The SRA will allow European law firms establishing in England and Wales the choice of whether to do so as an authorised body with the full rights and responsibilities of an SRA-regulated entity, or whether to establish as an ‘Exempt European Practice’ which would have the same practice rights as a foreign law firm establishing in England and Wales outside of the regulated arena. European lawyers who currently practise in England and Wales and provide services to the public must register with the SRA and their entity must be authorised regardless of the nature of their practice or whether or not they engage in reserved activities. This can be restrictive where the firms concerned are not practising reserved legal activities, or indeed any English law at all. Some European law firms wishing to establish in England and Wales have found their home country practice vehicles are not compliant with the SRA’s Practice Framework Rules and they have been required to restructure or establish a separate English practice. This change again adds to the work the SRA has been doing to reduce regulatory burdens on those solicitors working outside their "home" legal jurisdiction without exposing clients to unnecessary risk.

Print page to PDF