SRA Regulatory Reforms – who benefits?
This month has seen the launch of a whole raft or regulatory reform proposals from the Solicitors Regulation Authority, many of which go to the heart of public protection and which inevitably raise the question as to whose interests are being addressed.
The proposals have not been issued in isolation. Not only do they form part of a series of reforms following on from the SRA’s policy paper “Approach to regulation and its reform“, but they are also the next reforms in line following the proposed changes to the rules dealing with residual balances (see the consultation on residual client balances) and the recently closed consultations on Proposed changes to the registered European lawyer regime and training and continuing professional development. Indeed, further reforms are planned to deal with issues such as reducing the impact of the separate businesses rule and, at the time of writing, proposals to abandon mandatory continuing professional development are well advanced.
The SRA states that the aims of the reforms are 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.
However, the cynical could easily, although I am sure mistakenly, believe that it is all about reducing the regulatory burden on the SRA – an issue which is in fact highlighted in several places including the proposals in relation to residual balances and the proposals for removal of the need for the accountants report.
Whilst no one in legal practice wants to be over-regulated, there is nevertheless, a de minimis level for regulation, below which the interests of the public begin to suffer.
In the press release accompanying the notification of the reforms, SRA Chair of the Board Charles Plant is quoted as saying:
“We are determined to regulate in a way which maintains the core professional principles and which enables good, committed, lawyers and firms to meet the diverse legal needs of an increasing number of consumers.”
The problem is that not all lawyers are either good or committed – and even many of those who are both good and committed need to consider cutting as many corners as they can simply to make ends meet and to carry out work in a way which the public find cost effective.
Reducing regulatory burdens is not always about reducing regulation – it is often as much about imposing clear, consistent, explained and lucid regulation in a proportionate way.
Explaining what is required and ensuring that those who practise understand that which is required is as much a feature of good regulation as wiping away layers of regulation that were placed there to benefit those who are vulnerable.
Much is said about the diverse needs of consumers and the requirement that firms are able to be in a position to address those needs.
However, those needs must still be addressed in a professional way if we are to retain credibility. Removing the mandatory requirement for training and replacing it with a vague requirement that solicitors work out and plan their training needs across the firm, for example, does not address either the credibility of the profession or the needs of the firm. Similarly, removing the need for an accountant’s report removes one of the checks and balances that enables recognition of those firms who are either negligent or fraudulent in relation to their accounting practices.
So, the plea to the SRA is simple. Don’t throw the baby out with the bath water in a hurry to simplify regulation. Sometimes, simple is not always best.
More importantly, everyone needs to ask for whose benefit are the regulatory changes being made. If it is simply to make the job of the SRA easier then that is not enough. If it is to make fewer regulatory demands upon the profession then it has to be clear that:
- the demands will in fact be fewer and not, through uncertainty, greater, and
- that the interests of the public, the profession and the overall rule of law are not being prejudiced.
Many of the issues considered are quite fundamental. Let us therefore consider them fully and not be rushed into them.