Risk based regulation

The SRA takes what it calls a risk-based approach to regulation, that is to say it takes an approach where the use of regulatory powers and the extent to which those powers are used is proportionate to the risk posed by the misconduct in question. It will look at factors such as the impact which the conduct will have, the effect upon clients and the public, the reputational risk to the profession and the likelihood that the conduct will be repeated. In this way, not only is an overly heavy-handed approach avoided but also the SRA is able to target its resources where they are most needed. A full explanation of the risk based system can be found on the SRA web site in the item Risk-based regulation.

Thus, when an allegation of misconduct is received by the SRA it will be assessed against consistent criteria, such as:

• the relative seriousness of the allegation in terms of direct impact on the public,
• the credibility of the evidence and likelihood of the alleged misconduct being repeated,

The evidence will then be scored against over 200 types of risk, with the objective risk to the public, as well as the subjective behaviour of the solicitor, being taken into account. This will lead ultimately to an overall regulatory risk score reflecting both the impact and probability of the alleged misconduct. The risk scoring categories are organised by reference to the Code of Conduct with each category carrying a score from 1 to 10 – 1 being the least serious, 10 the most serious. Amongst those which are rated the highest are those which the SRA deems to be intolerable risks, and which include:

• systematic fraud or dishonesty
• assisting others to carry out wrongdoing
• incompetence or misconduct amounting to dishonesty
• misconduct in relation to high profile matters or which are injurious to the interests of justice
• single instances of serious misconduct
• serial instances of misconduct and incompetence

Thus, for example, a conviction involving a custodial sentence or a conviction for dishonesty would carry a category score of 10, whilst lack of anti-discrimination policy would carry a category score of 4. These scores would then be fed into an equation – (category score x objective score x subjective score) + regulatory history – where:

• objective score is the objective impact that the conduct would have on others, ranging from 10 for a widespread and extensive impact on considerable numbers of clients or others to 2 where there is a minor or no adverse impact,
• subjective score is degree of culpability or intention on the part of the solicitor ranging from 2 for something which is deliberate and/or dishonest to 1.2 for something which is inadvertent, and
• regulatory history relates to number of regulatory or disciplinary processes in which the solicitor in question is or has been involved, ranging from 10 for an open SDT hearing to 3 for a late accountant’s report.