A phased review of the SRA Handbook and regulatory approach – Principles, Code of Conduct and Practice Framework Rules
The SRA is planning to radically simplify the Handbook, starting with revising the Principles and the Code of Conduct. For the first time, they are proposing two separate codes – a Code of Conduct for Solicitors and a Code of Conduct for Firms. These replace detailed and prescriptive requirements with a framework for competent and ethical practice. Every solicitor will be absolutely clear about their personal obligations and responsibility to maintain the highest professional standards. Firms will have real clarity about the systems and controls they need to provide good legal services for consumers and The SRA is currently carrying out a consultation with all firms and have invited firms to respond by September 21st.
Compliance and business systems
In this article we focus on the proposed draft of the Code of Conduct for Firms and how they will impact on compliance and business systems for firms. Under the proposed changes to the Handbook the number of Principles will be reduced down to 6. This will allow the regulator to focus on the most important elements of the Code which they believe to be in the public interest.
You will still be required to keep and maintain records to demonstrate compliance with your obligations under the SRA’s regulatory arrangements. In order to demonstrate you have effective governance structures, arrangements, systems and controls in place that are effective and compliant, they will need to be documented and updated on a regular basis.
You will have to demonstrate compliance with all the SRA’s regulatory arrangements, as well as with other regulatory and legislative requirements, which apply to you. In order to do this, it is important that you can show a real understanding of the regulations and how they apply to you and have them documented.
Your managers and employees must ensure compliance with the SRA’s regulatory arrangements which apply to them. In order for you to meet this requirement a culture of compliance needs to be established across the firm so that all staff are aware of the regulations that will impact on them personally.
You will remain accountable for compliance with the SRA’s regulatory arrangements where your work is carried out through others, including your managers and those you employ or contract with. You will be required to identify, monitor and manage all material risks to your business, including those which may arise from your connected practices. You must ensure your managers, employees and interest holders and those you employ or contract with do not cause or substantially contribute to a breach of the SRA’s regulatory arrangements. This will require you to identify training needs and in the case of contactors, carry out sufficient due diligence to ensure that they will not contribute to a breach.
You will be required to ensure that your compliance officers are able to discharge their duties. It is essential that their duties are contained within their job descriptions and in the case of the COFA, they have full access to all the firm’s financial information. This is a fundamental requirement as you are required to actively monitor your financial stability and business viability. In addition to all the above, your COFA must take all reasonable steps to ensure that your firm and its manager and employees comply with any obligations imposed upon them under the SRA Accounts Rules and as soon as reasonably practicable, report to the SRA any serious breach of the SRA Accounts Rules which apply to them.
The SRA is seeking to introduce the revised Handbook in 2017. It is important firms understand how the revised Code will impact on them to ensure compliance with the SRA’s regulatory arrangements.