Waivers policies

Date published: 6 October 2011

• 1.

  The purpose of this statement is to

  • explain which provisions in the SRA Handbook ("the Handbook") we may waive
  • outline the possible circumstances in which we may do so, and
  • address particular issues relating to separate businesses.

All previous waiver guidelines had effect until 5 October 2011. From 6 October 2011 they were replaced with this statement, supplemented where necessary with further category-specific waiver guidelines, consistent with both this statement and with the provisions of the Handbook.

Which provisions can be waived?

• 2.

  Certain provisions in the Handbook can be waived in particular circumstances, for example the SRA Code of Conduct (the Code), the SRA Practice Framework Rules (the PFR) and the SRA Indemnity Insurance Rules.

• 3.

  It should be noted that although the SRA has the power to waive certain provisions in the Handbook, we do not have the power to waive those provisions which reflect statutory requirements.

In what circumstances can waivers be granted?

• 4.

  A regulated person or firm applying for a waiver will need to show that the circumstances of the application are sufficiently exceptional to justify a departure from the relevant provision(s). It is for the applicant to demonstrate that exceptional circumstances exist. Examples of factors that might be taken into account include

  • an unintended or capricious effect arising from the operation of the provisions
  • hardship arising from the operation of the provisions
  • a public benefit to be gained by a departure from the provisions; or
  • some other exceptional case justifying the grant of a waiver;

with no appreciable attendant downside risks.

• 5.

  Circumstances which would militate against the granting of a waiver would include that

  • the waiver would undermine the public interest which the provisions are designed to safeguard;
  • the waiver would undermine the integrity of a provision; and
  • the waiver would be contrary to the policy of the SRA.
• 6.

  In all cases an applicant will need to satisfy us that granting a waiver will not give rise to a material risk to the regulatory objectives in s.1 Legal Services Act 2007 or the the SRA Principles contained in the Handbook, neither of which we have the power to waive.

• 7.

  Set out below are illustrations of how the waivers policy operates in a number of areas. In all circumstances the SRA's decision will be based on the factors set out in paragraphs 6 to 8 above.

SRA Practice Framework Rules (PFR)

• 8.

  We currently grant waivers of regulatory equivalents of the PFR, for example regarding supervision requirements and the activities of in-house solicitors and registered European lawyers. This is sometimes in recognition of the fact that the rules apply to solicitors working in a variety of entities, and the rules may have some unintended consequences, bearing in mind the particular circumstances.

• 9.

  We anticipate that under the new regulatory regime, similar circumstances will arise which may justify the grant of a waiver. So, solicitors working in not for profit organisations might wish to apply for a waiver in respect of the charging restrictions if they feel there are exceptional circumstances, such as particular public interest, consumer, access to justice and/or competition benefits to be gained from a departure from the normal rule.

Separate businesses

• 10.

  We anticipate that the legal services market will change and develop following full implementation of the Legal Services Act 2007 (LSA), with the licensing of alternative business structures and the introduction of the Handbook, including the Code. The impact of Chapter 12 of the Code (separate businesses) in a changed market is difficult to predict - some unintended consequences may occur. Therefore, in accordance with our risk-based and outcomes-focused approach to regulation, we provide this policy statement to explain how we will deal with any application for waiver of the provisions concerning separate businesses.

• 11.

  An applicant for a waiver of the separate business provisions will need to demonstrate that the circumstances of the application are sufficiently exceptional to justify a departure from the relevant provisions.

• 12.

  For example, an applicant who/which does not wish to integrate an existing "prohibited separate business" into an SRA-regulated entity may need to provide evidence that integration would give rise to significant and disproportionate cost, or to significant management or structural difficulties, so that the strict application of the provisions concerning separate businesses would effectively present an unjustifiable barrier to entry into the market and hence potentially impede the competition and consumer aspects of the regulatory objectives.

• 13.

  Factors to which we will have particular regard will include:

  • whether adequate or equivalent client and consumer protection is achieved in any prohibited separate business, for example by virtue of that prohibited separate business being regulated by another regulator;
  • the extent to which there is a clear separation of the two businesses such that there can be no confusion on the part of the public or clients as to the scope of their regulatory protection;
  • the extent to which the two businesses are connected, for example whether the connection is only at the level of ownership in, say, two unconnected businesses in which the owners play no role as either manager or employee.
• 14.

  Every application will be considered on its individual merits.

• 15.

  The SRA will keep the content and operation of the waiver policy under review throughout the OFR implementation process. In addition, we will review the application of the waiver policy to the separate business provisions in the Code as part of a future review of those provisions. The timing of this review will be agreed with the LSB, taking account of broader policy developments in relation to reserved and non-reserved activities.