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Consultation launched on financial penalty guidance

The Solicitors Regulation Authority (SRA) is asking for feedback on its proposed guidance on the fines it can levy against firms and individuals that have breached the Code of Conduct.

The consultation outlines the approach that SRA decision makers will take on the levels of financial penalties it can set. The proposals look to make the fining criteria more consistent and transparent.

A clear fining policy is a key building block in a robust deterrent system, which is one of the fundamentals of good regulation. This in turn helps the SRA to protect consumers from poor conduct.

If approved, the policy would adopt a three-step approach to determining the level of a financial penalty:

  1. The seriousness of the conduct
  2. Mitigating factors
  3. Whether the penalty will remove profit arising from the conduct

Assessing the seriousness of the conduct would involve looking at both the nature of the conduct and the harm caused to clients or others. Decision makers would be guided in individual cases to ‘penalty brackets’ within which to levy a fine.

Owing to the £2,000 limit on the SRA’s fining powers in respect of ‘traditional’ law firms and those working in them, the guidance would currently be most relevant to ABSs and those working in them. The consultation also proposes that discounts of up to 40 per cent could be applied in warranted by the mitigating factors.

David Middleton, SRA Executive Director for Legal & Enforcement, said: "The effective and proportionate use of regulatory powers plays an important role in protecting the interests of consumers and the integrity of the legal system. Financial penalties provide a flexible method of deterring inappropriate conduct by those directed to pay them but also by sending a deterrent message others.

"The guidance would sit underneath the existing framework in the SRA Disciplinary Procedure Rules for determining when a fine is appropriate and what sum should be levied. "We’re keen to receive stakeholder views on our thinking here and on the new ideas discussed in the consultation."

The consultation runs for 12 weeks until 19 April.

More on the consultation

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