Financial penalties

What are we trying to do

We have updated our approach to the way we issue financial penalties for proven misconduct. This includes linking fines to income and having fixed penalties for specific misconduct.

Who needs to know

Law firms and solicitors and other staff working within them.

What's going on

Following consultations in 2021/22 and 2022, and an application to the Legal Services Board our new financial penalties regime has now come into force.

The changes we have made will help us to resolve cases as quickly and effectively as possible, reducing stress and cost for all those involved while providing a credible deterrent and upholding public trust and confidence in the profession.

We will continue to refer serious cases of misconduct to the Solicitors Disciplinary Tribunal (SDT). Only the SDT can suspend and strike off solicitors, while it also has unlimited fining powers.

Further details on how we make decisions, our new powers, and how we ensure transparency in our decision-making processes can be found in our financial penalties statement.

Linking fines to income

We have amended our fining framework for firms and individuals to now take into account, in all cases, the turnover of firms and income of individuals when setting levels of fines.

Information on how we determine the appropriate level of a fine can be found in our updated financial penalties guidance.

This takes account of the maximum fine we will usually impose on a firm being increased to 5% of turnover. It also explains how we will use default salaries (based on seniority and place of work) as the basis for setting fines for individuals where they do not provide us with the evidence of their income we require.

Fixed penalties

We have introduced a schedule of fixed penalties for firms of up to £1,500. These will apply to a small number of lower-level breaches of our rules to enable lesser issues to be dealt with more effectively and in a timely way.

Fixed penalties will also provide greater transparency and consistency in how penalties for those lower-level issues are applied.

Examples of misconduct which may result in a fixed penalty include:

• Failure to comply with a regulatory request for information – for example declarations of compliance with AML requirements, submitting your Firm Diversity Data return.
• Failure to publish the required costs or complaints information, or display a clickable logo, in accordance with the SRA Transparency Rules.
• Failure to ensure appropriate approval, or notification of, firm role holders.

Issuing of a fixed penalty does not remove the need to comply with the original issue and further enforcement action may result if non-compliance continues.

Cases where a fine is not an appropriate penalty

We have amended our enforcement strategy to make it clear that for any case involving sexual misconduct, discrimination or any form of harassment, a financial penalty will only be considered in exceptional circumstances.