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Firms risk missing COLPs and COFAs approvals deadline, warns SRA

Several hundred firms could start the New Year without having their compliance officers in place, the SRA Executive Director with overall responsibility for the appointment of these key roles, warned today.

Samantha Barrass told the Risk Management for Law Firms conference at Holborn Bars, that, while the majority of the profession - well above 90 percent - had been fully co-operative with the nominations process, there was still a significant number of firms, largely in the small firm category (up to four partners) who had failed either to complete the process or even start it.

Of equal concern as those who had failed to nominate their compliance officers, were the significant number of firms who had nominated individuals who would not be approved, due to disciplinary and other significant issues, she explained.

Ms Barrass said: "As a result of the issues I have highlighted, we estimate that several hundred firms will not have a COLP and COFA in place by 31 December 2012. All these firms will be in breach of their licensing conditions or practice regulations.

"Appointing COLPs and COFAs is not an administrative exercise, nor optional. Firms have a regulatory obligation to appoint them.

"These roles are an integral part of our move to outcomes-focused regulation. They are key to building confidence that firms will take responsibility for managing risks to their delivery of competent and ethical legal services - because the best protection for clients is well-run, ethical firms.

"It is not putting it too strongly to say that the success of OFR depends on the profession working with us to ensure these roles operate effectively."

Compliance Officers for Legal Practice and Compliance Officers for Finance and Administration were introduced as part of the SRA's move to outcomes-focused regulation. Approved role-holders will act as ‘guardians' for managing risks within their individual businesses. Nominees, therefore, have to pass a Suitability Test to ensure they are competent to perform the role. Firms had until 31 July to nominate individuals. COLPs and COFAs will take up their roles on 1 January 2013.

The SRA is currently engaging with firms that have not yet completed the nomination process, or who have nominated unsuitable individuals. In this case, the SRA is working with them to identify a more suitable COLP or COFA.

Ms Barrass stressed: "Our priority for next three or so weeks is to get as many COLPs and COFAs as possible in place by 1 January. We have a team in place supporting this process and talking to the firms involved.

"But we will be taking proportionate enforcement action against those who failed, without good reason, to meet the deadlines set in the nomination process, or who failed to disclose information when they were required to do so. Serious cases of non-disclosure will be dealt with accordingly and initial enforcement action has already commenced in respect of firms who have so far failed to complete the nomination process."

Ms Barrass added that it had taken longer than expected to notify those approved COLPs and COFAs of the outcome of their application, due in part to the additional work created by these issues. Several thousand approvals were dispatched last week and many more will be sent out over the coming days.

Those who have not yet been contacted by the SRA and whose nomination was submitted before 31 July, can take the view that 'no news is good news' and they will receive their approval before 31 December.

Read the full speech.  

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