SRA Proposes Regulatory Reform

SRA Proposes Regulatory Reform

The SRA has announced plans for what it has described as a wide-ranging programme of work to improve the regulation of solicitors and firms.

The proposals, which are contained in a policy statement, Approach to Regulation and its Reform, are supported by a number of consultations which address:

  • Compensation Arrangements Review: the introduction of an eligibility criteria;
  • Multi-disciplinary practices;
  • Proportionate regulation: changes to minimum compulsory professional indemnity cover;
  • Proportionate regulation: changes to reporting accounting requirements.

The SRA states that the aim of the programme is to:

  • remove unnecessary regulatory barriers and restrictions to enable increased competition, innovation and growth to better serve the consumers of legal services;
  • reduce unnecessary regulatory burdens and cost on regulated firms;
  • ensure that regulation is properly targeted and proportionate for all solicitors and regulated businesses, particularly small businesses.

The separate consultations on the four major elements of the programme deal specifically with:

  • changes to enable increased entry of multi-disciplinary ABSs to the market and ensure the regulation of such entities is targeted and proportionate;
  • changes to the arrangements for compulsory PII for regulated entities to ensure that the minimum requirements set for firms are proportionate whilst maintaining protection for the public, particularly individuals and small businesses;
  • changes to the compensation arrangements to ensure these are targeted at consumers requiring protection and to ensure the overall cost of these is proportionate and affordable; and
  • changes to the requirements for accountants’ reports on client accounts to reduce the cost of the current arrangements whilst maintaining proportionate safeguards over client money.

The SRA has also announced its decision on an earlier consultation to require insurers participating in the solicitors’ PII market to have a financial strength rating. The SRA has decided not to implement the proposed change at this time, but will keep this under review.

The SRA also intends to bring forward a package of measures to reduce regulatory burdens on small firms and to increase the level of support to such firms from the Authority. It will be engaging with solicitors, firms and representative bodies on the contents of this package and intends to publish proposals in the summer.

The SRA is also considering changes to the separate business rule to provide greater freedom to all regulated firms about how they structure their businesses whilst maintaining appropriate levels of consumer protection. It is intended to publish a consultation paper in November 2014 and implement changes in April 2015.

The policy statement, Approach to Regulation and its Reform, can be found on the SRA web site at www.sra.org.uk/sra/policy/regulation-reform.page

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