News release

SRA announces major programme of regulatory reform

The SRA has set out its plans for a wide-ranging programme of work to improve the regulation of solicitors and firms.

Proposals are published in a policy statement, Approach to Regulation and its Reform. This paper provides clarity about the SRA's purpose, its approach to regulation and its priorities. It provides the foundation for significant change in the way the SRA regulates and puts into context a programme of reform which starts with the publication of four consultation papers.

The programme aims to:

  • remove unnecessary regulatory barriers and restrictions to enable increased competition, innovation and growth to better serve the consumers of legal services;
  • reduce unnecessary regulatory burdens and cost on regulated firms;
  • ensure that regulation is properly targeted and proportionate for all solicitors and regulated businesses, particularly small businesses.

The separate consultations on the four major elements of the programme include:

  • changes to enable increased entry of multi-disciplinary ABSs to the market and ensure the regulation of such entities is targeted and proportionate;
  • changes to the arrangements for compulsory PII for regulated entities to ensure that the minimum requirements set for firms are proportionate whilst maintaining protection for the public, particularly individuals and small businesses;
  • changes to the compensation arrangements to ensure these are targeted at consumers requiring protection and to ensure the overall cost of these is proportionate and affordable; and
  • changes to the requirements for accountants' reports on client accounts to reduce the cost of the current arrangements whilst maintaining proportionate safeguards over client money.

The SRA has also announced its decision on an earlier consultation to require insurers participating in the solicitors' PII market to have a financial strength rating. The SRA has decided not to implement the proposed change at this time, but will keep this under review.

The SRA also intends to bring forward a package of measures to reduce regulatory burdens on small firms and to increase the level of support to such firms from the Authority. It will be engaging with solicitors, firms and representative bodies on the contents of this package and intends to publish proposals in the summer.

The SRA is also considering changes to the separate business rule to provide greater freedom to all regulated firms about how they structure their businesses whilst maintaining appropriate levels of consumer protection. It is intended to publish a consultation paper in November 2014 and implement changes in April 2015.

Further reforms are also being developed and these will be progressed alongside existing programmes of change such as the planned fundamental revisions to the systems for educating, training and developing solicitors through the Training for Tomorrow programme.

SRA Chair of the Board Charles Plant said: “We are determined to regulate in a way which maintains the core professional principles and which enables good, committed, lawyers and firms to meet the diverse legal needs of an increasing number of consumers. We have set out the approach we will take in order to provide clarity for those we regulate, for the legal services market more widely, and for consumers.

"I believe this programme will deliver a system that achieves our fundamental purpose of protecting consumers and supporting the proper administration of justice, and do so in a more proportionate and targeted way. In the process we will remove unnecessary regulatory barriers and burdens.

"This will be consistent with and support the government's challenge to all legal services regulators to, 'reduce regulatory burdens on practitioners in the legal sector, and promote innovation, competition and growth in the legal services market'."

The policy statement, Approach to Regulation and its Reform, and a full policy statement on a minimum rating for participation (PDF 1 page, 128K) are available on the SRA's website.

The consultations are also available on the SRA's website:

 
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