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SRA consults on unified Handbook for law firms and ABSs

The SRA today launches a consultation paper setting out a unified regulatory Handbook for both traditional law firms and ABSs.

The consultation is the fourth issued by the SRA on fundamental changes to the way in which solicitors and firms are regulated, to take effect from October 2011 – the date when ABSs will also be licensed.

It includes the draft Code of Conduct, revised and developed following responses to the May consultation, plus rules governing key regulatory protections such as the Accounts Rules (to protect clients' money), new tighter procedures for the authorisation of firms and individuals, and reformed disciplinary procedures. It also sets out the proposed new information requirements for firms, to enable the SRA to target its resources on the areas of highest risk.

Chief Executive Antony Townsend said: "We thank all those who have taken part in our consultations, events, discussions and research so far. We had an excellent response and their views have helped shape our policy.

"The new Code of Conduct and the outcomes-focused approach to regulation have been generally welcomed, with strong agreement with our proposals to have a common standard of consumer protection for all types of law firms, whether traditional or ABSs.

"There was also healthy debate – with comments from respondents ranging from traditional law firms of all sizes to potential owners of ABSs, as well as from consumer and special interest groups – and we have reviewed and revised the Handbook.

"Our programme to transform regulation remains on track for 2011. The reforms will help us identify and concentrate on the areas of highest risk, help firms focus on the quality of service to consumers, and bring greater flexibility for well-managed firms, enabling them to deliver services in ways suited to their clients and type of business."

The new consultation paper addresses issues and themes raised in the May consultation (which gave first sight of the new Handbook). We have:

  • Included limited guidance where appropriate. There was enthusiasm for guidance on a range of issues, but we have avoided detailed guidance, due to the risk of this becoming seen as mandatory. Instead we have amended and expanded some of the indicative behaviours, and will provide further help to firms by regularly publishing frequently asked questions on our website.
  • Inserted new chapter on conflicts of interest, which maintains our general approach. In the new chapter there is no separate provision in relation to conveyancing since acting where there is a conflict of interests between a seller and buyer, a lessor and lessee or a lender and borrower, would clearly be prohibited under the general prohibition.
  • Kept the current arrangements for separate businesses. Our recent consumer research confirms that we need to ensure that regulated firms do not provide non-reserved activities through separate business to escape the protection of regulation.
  • Reviewed outcomes and indicative behaviours with respect to in-house practice and made revisions to the application to in-house practice at the end of each chapter.
  • Redrafted principle 9 on equality and diversity , to ensure it is clear and provides a sound basis for the outcomes we will require firms to deliver in this area.
  • Provided more detail on information requirements for firms setting out the key areas of risk, the criteria the SRA will use to determine the data required, and some examples of current thinking. There will be a separate consultation on the detail of this in early 2011.
  • Kept the requirement for all firms to have a Compliance Officer for Legal Practice (COLP) and Compliance Officer for Finance and Administration (COFA) . Our experience shows a clear need for specified individuals within firms to be responsible for implementing systems and controls, in the interests of all firms and the public. Consultation responses were split on this issue.
  • Redrafted the regulations for education and training . To improve clarity.

One major issue highlighted for discussion is the definition of reserved legal activities. The SRA has asked the Legal Services Board (LSB) to extend the definition to cover all "solicitor activities", to avoid consumer confusion over which legal services are regulated and which are not and we welcome the LSB's commitment to examine the appropriateness of the extent of reserved activities.

Notes to Editors

  • 1. Outcomes-focused regulation will see the detailed and prescriptive rulebook replaced with a targeted, risk-based approach concentrating on the standards of service to consumers. ABSs will be a new way of providing legal services which will enable non-lawyer organisations to provide legal services and external investment and ownership of law firms.
  • 2. The timeline towards implementation of OFR and ABSs is set out below:
    Date Action
    End November 2010 Policy statement published – with more practical detail of our regulatory approach
    13 January 2011 Second Handbook consultation closes
    April 2011 Publication of final Handbook
    August 2011 Anticipated designation of SRA as a Licensing Authority for ABSs
    6 October 2011 First ABSs licensed and implementation of new Handbook
  • 3. There were 83 written responses to the May Consultation. We have also taken into account feedback from our 11 roadshows and workshops around England and Wales, and from meetings with groups including equality groups.
  • 4. Further information can be found at Follow us on Twitter at
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