Criteria to determine the focus of an investigation (Archived)
Published 14 February 2012
The primary responsibility for ensuring compliance with a firm's regulatory obligations rests with the firm itself. However, there will be instances in which there is evidence of personal culpability and where, in consequence, the SRA will investigate the individual as well as, or instead of, the firm. It is also important in public protection terms to provide a credible personal deterrent against misconduct.
Whilst all relevant circumstances will be taken into account, the presence of any the following factors suggest that the SRA should investigate the individual:
- perpetration, facilitation or failure to guard against fraud—including mortgage and property fraud, money laundering and high yield investment fraud
- dishonesty or deception
- reckless or intentional misconduct
- misleading—the courts, third parties or clients
- abuse of a position of authority or trust, such as when acting as trustee, receiver or attorney
- when there has been a report about an individual alleging serious misconduct
- otherwise serious misconduct—particularly that which is systematic, deliberate or pre-meditated and/or with potential for significant adverse impact or involving a vulnerable person
- serial—repeated misconduct in the context of the regulated person's history
- criminal convictions
- failure to comply with personal regulatory requirements—such as practising uncertificated, breach of practising certificate conditions, breach of section 43 order
- failure to ensure that client money is properly accounted for at all times
- breach of the Solicitors Act—such as holding out, reserved work or offences under sections 41 and 44
- conduct outside practice which reflects on the regulated person's integrity
- the public interest is directly engaged—the allegations raise issues about the conduct of an individual which it is in the public interest to investigate or which are of particular sensitivity or importance
When deciding whether to investigate the individual, the SRA will need to consider not only the type of matter but also the personal behaviour of any individual involved and in particular whether there is evidence of any of the following with regard to the individual which may indicate some direct personal responsibility:
- personal motive such as gain for self or associates,
- persistent non-compliant behaviour,
- failure to cooperate with the SRA,
- an adverse personal regulatory history.
Although in almost all matters the individual investigation will be in conjunction with an investigation of the firm, there will be some instances where only the individual will be investigated. An example of this is personal criminal behaviour outside of practice, such as drink driving.
The decision tree attached sets out the factors to be considered when considering the most appropriate focus for any investigation and when, although the decision as to who to investigate can be reconsidered at any time during an investigation.
The position with regard to "recognised sole practitioners" is that the SRA will use these criteria to determine whether there any relevant individuals within the practice who should be subject to an individual investigation. However, where the SRA determines that a regulatory sanction is required in relation to the firm, this can only be made and recorded against the recognised sole practitioner, in addition to any other action that maybe taken in respect of an individual.
Firm/individual focus of investigation and enforcement action decision processes
Firm/individual focus of investigation process
Is matter as a result of a criminal conviction of individual or behaviour outside practice?
If yes, then we will only consider the individual.
If no, are there fitness to practice issues to consider, e.g. recklessness, personal gain, dishonesty, incompetence or repetition, criminality or personal disciplinary history?
If there are fitness to practice issues, we will consider the individual and the firm.
If there are no fitness to practice issues, we will only consider the firm.
Enforcement action decision process
The enforcement and disciplinary process contains three key stages: risk assessment, investigation or inspection, and outcome.
This decision tree is used at all stages and can be used several times within any given stage.
The enforcement and disciplinary process begins with a risk assessment, followed by an investigation or inspection. Investigation or inspection may result either in a renewed risk assessment or an outcome. Once an outcome has been decided, the process will either end or return to the risk assessment phase.