Focusing investigations: a statement of good practice
Investigations at firms' offices vary considerably. Some are completed within days either because there is no evidence of wrongdoing or there is an obviously serious problem, such as a substantial amount of money missing from client account, requiring intervention. Others may take considerable time as problems are uncovered (sometimes in the face of hidden or destroyed evidence or other lack of co-operation), evidence is gathered and legal advice obtained on evidence or remedy. It is important to strike a balance between concluding investigations promptly and ensuring that they are done thoroughly and without obstruction.
The conclusion of an investigation at a firm's office will be calculated by the date when it is decided that no action is required or the formal report of investigation is completed.
This will normally be concluded within 3 months of the first visit to the firm. Subsequent regulatory action by the SRA may then be undertaken, for example if the report is referred to a caseworking unit.
Some investigations will inevitably take longer. Further periods of 1 month, up to a total of 3 additional months, may be authorised by managerial staff, their decision being recorded in writing.
Some cases, particularly those that are complex or highly contentious, may take considerably longer. An investigation at a firm's office which has been continuing for 6 months may be authorised for continuation by a head of business unit or above, with reviews at least 3 monthly.
The substantive focus of the investigation
The standard checks to be made in all cases will be clearly specified by information provided on the SRA website, by information sheet or in the visit letter—such as checks on client account, anti-money laundering compliance, and upon compliance with specific rules in accordance with current SRA policy.
Investigations will be categorised when authorised by reference to the SRA's published risk matrix, specifying the general issues to be investigated. On-site visits will be targeted following a risk assessment, setting out the specific allegations and regulatory concerns.
It is common for firms displaying one risk factor, which has given rise to the investigation, in fact to be found when visited to be at risk for other reasons. It is critical therefore that an investigation can, urgently if necessary, be extended or completely refocused to different issues. For example, this can and should be done:
- where the investigator has come across evidence or information suggesting serious misconduct, or
- where new information has been received separately and a risk assessment justifies further investigation.
In the circumstances of 8a, the scope of the investigation can be authorised by managerial staff. Investigators can begin work on the issue identified immediately but should seek confirmation and authorisation from their manager or more senior staff promptly. The reasons for the extension or change in scope of the investigation should be recorded.
In the circumstances of 8b, unless there is urgency (in which case managerial staff can provide immediate authorisation), a formal risk assessment of the information will be carried out and recorded, taking into account where appropriate the existing investigation. Initially this will be undertaken centrally but in due course, Field Managers will be trained to undertake all but the most complex reassessment of risks.
Reasons for investigations may be disclosed in accordance with the SRA policy statement. Read our guidance on on-site investigations.
The SRA will strive to ensure that investigations are conducted in accordance with this statement, but it is a statement of good practice and should not be interpreted closely as if it comprised rules. Cases will be dealt with on their individual facts and merits and may require different treatment in the public interest.