How the SRA uses its disciplinary powers

Introduction

This guidance explains the possible outcomes of our disciplinary investigations and in particular how we will use our powers to fine and rebuke. The powers can be found in section 44D of the Solicitors Act 1974. We have also made rules setting out the circumstances in which we will exercise the powers and governing when we will publish our decisions to do so. The rules, called the SRA Disciplinary Procedure Rules 2010 (the Rules), came into force on 1 June 2010 but do not apply to any acts or omissions which occurred wholly before that date.

This guidance provides two sets of indicative factors about:

  1. Types of outcome and sanctions we apply;
  2. How we decide that a set of facts is one "case" for the purpose of imposing a financial penalty.

The wider context of our work

We are committed to taking a risk-based approach to regulation. The use of our regulatory powers and the resources allocated to us are determined by the potential risks posed to the achievement of our overall objectives. In that context, the purposes of enforcement action include:

  • credible deterrence of behaviours that breach the core principles
  • the encouragement and facilitation of compliance with the core principles and other regulatory requirements
  • control of firms that represent a risk to the public or the core principles
  • removal of those who represent a serious risk to the public.

Our approach focuses the use of our resources on those whose conduct creates risk to the interests of their clients or others.

Section 1 - Outcomes

We set out in this guidance our approach to the different outcomes flowing from our investigations of misconduct by those we regulate. It is important to bear in mind that the facts of individual investigations and the circumstances of the people involved vary considerably and each case must be decided on its own facts. We hope however that these guidelines will help you understand how we work and what to expect. One important overall factor is that the outcome for the regulated person is likely to be more serious if there is more than one allegation of misconduct is being investigated or proved.

When we talk about misconduct in these guidelines we mean when a regulated person has failed to comply with a requirement imposed by the statutes under which we regulate or with professional rules or, more broadly, has committed professional misconduct.

These outcomes are designed to support a proportionate response to misconduct. We will focus on compliance by firms but individual misconduct will be subject to enforcement action where appropriate.

Factors that influence our decisions about outcome

Rule 3 sets the circumstances in which we may decide to give regulated persons a written rebuke or to direct them to pay a penalty of presently up to £2,000 . This is where the act or omission:

  • was deliberate or reckless;
  • caused or had the potential to cause loss or significant inconvenience to any other person;
  • was or was related to a failure or refusal to ascertain, recognise or comply with the regulated person's professional or regulatory obligations such as, but not limited to, compliance with requirements imposed by legislation or rules made pursuant to legislation, the SRA, the Law Society, the Legal Complaints Service, the Tribunal or the court;
  • continued for an unreasonable period taking into account its seriousness;
  • persisted after the regulated person realised or should have realised that it was improper;
  • misled or had the potential to mislead clients, the court or other persons, whether or not that was appreciated by the regulated person;
  • affected or had the potential to affect a vulnerable person or child;
  • affected or had the potential to affect a substantial, high-value or high-profile matter; or
  • formed or forms part of a pattern of misconduct or other regulatory failure by the regulated person

and provided the act or omission was neither trivial nor justifiably inadvertent.

We also use other outcomes and we set out here some additional general criteria that may be relevant to our decision about the right outcome.

Factors that may lead to a lower sanction than might otherwise be impose include:

  1. There have been no adverse consequences of the regulated person's behaviour—it has not caused material distress, inconvenience or loss or impacted upon the public's confidence in the administration of justice
  2. There has been an early and genuine acceptance by the regulated person that misconduct has been committed
  3. The regulated person has promptly apologised
  4. Any money improperly used has been or will be repaid or the breach otherwise remedied
  5. The period over which misconduct took place was short and it was stopped as soon as possible
  6. The misconduct is no longer continuing
  7. The regulated person has not been the subject of previous regulatory or disciplinary findings and is not the subject of a continuing investigation or prosecution
  8. The regulated person has co-operated with the SRA's investigation
  9. The misconduct was not intentional
  10. The conduct was not in deliberate disregard of professional obligations
  11. The regulated person's inexperience
  12. The overall importance or value of the transaction or case in the context of which the misconduct occurred.

The absence of these factors may make us take a more serious view of the misconduct.

The time which has elapsed since the misconduct took place may be a relevant factor to take into account when deciding on the appropriate outcome. For example, if misconduct which might otherwise have led to a rebuke occurred some time ago, and the regulated person has had a good regulatory record in the meantime, that may influence a reduction in the outcome to, for example, a Finding and Warning.

Our outcomes need to represent a credible deterrent in order to discourage serious misconduct which causes harm or poses a risk of harm to clients, the administration of justice or the wider public. Serious cases will be dealt with by stronger sanctions and may require referral to the Solicitors Disciplinary Tribunal (SDT).

Outcomes

We describe in this section the most common outcomes of our disciplinary investigations. The list is not exhaustive and an outcome might involve a variation or combination of the types of outcome explained. For example, it might in some cases be appropriate to make a finding that a regulated person has breached a rule but to decide not to take any other action (such as to issue a warning) because the person did not realise that misconduct had taken place. On the other hand, a person directed to pay a financial penalty will usually also be rebuked.

The most common outcomes in rising order of seriousness are:

  1. Casework decision
  2. Letter of Advice
  3. Finding and warning
  4. Rebuke
  5. Financial penalty
  6. Referral to the SDT (which is a decision to prosecute at the Tribunal and not a final outcome in the case)

Casework decision

We close a case with a Casework Decision and without formal adjudication when:

  • there is no issue of professional conduct
  • there is no evidence of misconduct or
  • it is not proportionate to pursue the matter in all the circumstances.

We may also direct that an allegation be left to 'lie on the file', for example where the person has already been referred to the SDT and it is not procedurally possible to add in the new allegations into the proceedings.

Letter of advice

We decide to send a Letter of Advice when there has (or may have) been misconduct which was minor or technical. The misconduct will generally have had low impact and there must be a very low likelihood of repetition. Overall, it is not proportionate to investigate further.

Finding and warning

We decide to make a finding and issue a warning for significant but one-off misconduct.

The finding is that the misconduct has occurred and the warning is that this may be taken into account in determining the outcome of any future investigation.

We use a finding and warning for moderate misconduct, resulting in moderate impact. Since misconduct is being found, the likelihood of repetition is unlikely to be of relevance unless it is apparent as an aggravating factor, such as a refusal to acknowledge the misconduct.

A Finding and Warning (and more serious outcomes) will not generally be appropriate when the regulated person has been the subject of previous or other current regulatory or disciplinary action, such as that:

  • the regulated person has been the subject of two findings and warnings in the previous twelve months
  • proceedings before the SDT are current or likely
  • the regulated person otherwise has a poor recent disciplinary record with the SRA.

Rebuke

A written rebuke is a statutory disciplinary sanction. We will rebuke a regulated person when there has been significant misconduct, or a series of incidents which are cumulatively significant. A rebuke will be appropriate when the misconduct has caused, or had the potential to cause, significant impact. The conditions that must be fulfilled when imposing a rebuke are set out in paragraph 3 of the Rules.

Financial penalty

A financial penalty is a statutory disciplinary sanction. We will direct a regulated person to pay a financial penalty when there has been serious misconduct, or a series of incidents which are cumulatively serious.

A financial penalty rebuke will be appropriate when the misconduct has caused, or had the potential to cause, substantial impact.

A financial penalty may also be appropriate when the regulated person has made some gain from or in relation to the misconduct and it is appropriate to reduce or extinguish the gain.

Referral to the Solicitors Disciplinary Tribunal (SDT)

Our approach to decisions to refer regulated persons to the SDT is set out in a separate Code which was modelled on the Code for Crown Prosecutors. Decisions must fulfil an evidential test and a public interest test. It is applicable in the most serious cases, where misconduct has caused, or had the potential to cause high impact.

Section 2 — How we decide on what is a "case"

We do not seek to impose multiple fines under section 44D of the Solicitors Act 1974. If a number of allegations may, if proved, require a total penalty of more than the maximum we can impose, currently £2,000, the regulated person's conduct is likely to be referred to the SDT. Similarly, if a regulated person has already been fined, other allegations are likely to be referred to the SDT. In all cases we will apply the tests set out in our Code for Referral to the SDT.

Our essential approach is that we will not direct a person to pay more than one financial penalty for each "case". We explain what we mean by a "case" below. We reserve our position to argue in future that a proper interpretation of section 44D of the Solicitors Act 1974 allows for a penalty to be imposed for each failure "to comply with a requirement imposed by or by virtue of this Act or any rules made by the Society" or each instance of "professional misconduct".

A case is essentially a package of one or more related allegations. In deciding what should be dealt with as one case, we will take into account all the circumstances. We will not try to break up facts or allegations simply to enable us to impose more than one financial penalty, but we will pursue more than one investigation and impose penalties when it is justifiable to do so in the overall circumstances.

Factors that may cause allegations to be dealt with as part of one case include:

  • there is a close relationship between the allegations—such as that they arise from one transaction or one court case;
  • the allegations arise from one source—such as a visit-based investigation or a report from one informant;
  • the allegations can be characterised as the consequence of one particular act or omission.

If one or more of these factors apply, they should not be taken as indicating any reduction in the seriousness of the overall conduct. For example, if a regulated person has failed to comply with an undertaking, we will not usually impose a sanction if the breach is corrected quickly; but if the breach has continued for a significant period of time, or involves several separate breaches of undertaking that have caused detriment to clients, it will be serious and might require the attention of the SDT. Another example would be a regulated person entering into an agreement with an introducer and failing to inform clients of the financial arrangement.

Factors that may mean that cause allegations will not be dealt with together include:

  1. there is little or no relationship between them;
  2. they are separate in time;
  3. they involve allegations against different individuals;
  4. they arise from separate reports;
  5. they involve different types of misconduct.

We will not allow disputes about whether allegations should be dealt with separately or as one case to disrupt our investigations or other processes.

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