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SRA tells compliance officers to take a responsible approach to help weather the storm

In a keynote speech delivered at the COLPs and COFAs Conference held today (18 April), SRA Executive Director Samantha Barrass highlighted some key areas of risk for compliance officers to focus on.

As evidenced by recent high-profile firm failures, a very significant risk was financial instability. Samantha described the ‘toxic combination of factors’ causing a ‘perfect financial storm for many firms’, which included the current economic climate; reforms to civil litigation – particularly those heavily involved in personal injury work - and lenders tightening up on borrowing arrangements.

She described the juxtaposition of firms who were managing to weather the economic storm by taking a responsible and diligent approach to managing their finances and those recklessly putting their firm at risk of financial collapse. Irresponsible borrowing, high premises costs, and finances that were controlled by a small cabal were factors destined to lead to financial instability.

Samantha explained: "Given the current economic climate, combined with changes within the legal market, it was more important than ever for firms to ensure that they are taking appropriate steps to manage their exposure to financial risk." She stressed the importance of early engagement with the SRA and the need for full co-operation in ongoing interactions.

Samantha then turned her attention to the ban on referral fees in personal injury cases, and the SRA’s approach to the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO). She underlined the SRA’s expectation of firms’ swift compliance with the ban and said those heavily affected by LASPO should be considering the impact of the ban on financial viability.

She explained the importance the SRA places on law firms’ compliance with the law, and the SRA’s planned swift response to non compliance. Samantha also set out the support available to firms.

Samantha said: "We have developed guidance on how we will interpret LASPO for regulatory purposes... We have published this on a webpage dedicated to the ban, which also includes frequently asked questions and our supervisory and enforcement strategy..."

Samantha then went on to provide examples of compliance and non-compliance with LASPO. She went on to outline the support framework that the SRA was putting in place for the COLPs and COFAs community, which included a dedicated area of the website, a regular e-newsletter and an annual COLPs and COFAs conference.

"An important part of our approach is ensuring that COLPs and COFAs have maximum flexibility to carry out their duties in a way that best fits their business. Our approach is not to set unnecessarily prescriptive and burdensome tasks that don’t work in the public interest, and it is for this reason we recently announced our decision not to require recognised bodies to report non-material breaches, although they will still need to be recorded."

 
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