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Small Firms Division

A brief summary of the SRA Handbook consultation proposals - Phase 2

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  • Marzena Lipman

In late September, the SRA published  its three month consultation on the ongoing Handbook reform - Phase 2. Marzena Lipman, policy adviser, gives an overview of the consultation and encourages members to share their views on it.

The Solicitors Regulation Authority (SRA) has published a second consultation on its ongoing Handbook reform Looking to the future: phase two of our Handbook reform. The deadline for responses is 20 December 2017.

Key proposals include allowing self-employed solicitors to provide reserved activities on freelance basis, removing the ‘qualified to supervise’ rule, widening the practising address requirements beyond England and Wales to anywhere in the UK, and proposing that immigration and claims management work should not take place outside a regulated firm.

The proposals pursue a less prescriptive  approach to regulation, and will see the current Handbook reduced by about two thirds in areas within the scope of phase one and two consultations. The SRA believes the proposals will give firms more flexibility in they way they manage their business and choose to practise. However, at the same time the SRA recognises that a move away from prescriptive rules could have an effect on small firms.

The Law Society was active in opposing the changes to the Handbook during the first phase of consultation in summer 2016.  We believe, as did the large majority of solicitors we spoke to, that the SRA’s proposals would remove key client protections, and create confusion for clients.  We continue to have these concerns.

The Law Society plans to submit a full response to the SRA’s latest consultation, and we want to hear your views. Will a shorter Handbook genuinely be simpler, or will it result in a greater need to consult the SRA guidance to ensure compliance? Will the less prescriptive regulations create welcome flexibility that will allow your firm to run your business, or will it create uncertainty?

Overview of key changes

Authorising firms

The main changes to the way the SRA authorises firms relate to four areas:

  • Widening the practising address requirements so firms can be based anywhere in the UK, not just in England and Wales.
  • Allowing companies to have corporate bodies as directors.
  • Removing  the rule that requires solicitors to have three years of practising certificates to set up a regulated law firm.
  • Preventing immigration and claims management work outside a regulated firm.

Authorising individuals

The proposals include:

  • Allowing self-employed solicitors based in the UK to provide reserved legal activities without needing to be authorised as a recognised sole practice.
  • Streamlining character and suitability requirements.
  • Dispensing with the requirement to re-approve partners of firms, and other Legal Services Act regulated professionals.

Training Regulations

The SRA set out details on the Solicitors Qualifying Exam (SQE) transitional arrangements. Candidates who started to train before the SQE comes into force, and who complete their training during a transitional period, will be granted a full exemption from the new SQE requirements. There will be a cut off date 11 years after the introduction of the SQE. Apprentices will not qualify for the exemption and will have to pass all stages of the SQE whenever they started their apprenticeship. 

Specialist rules

The SRA proposes to remove the Property Selling Rules on the assumption that the legislation is either mirrored in the Estate Agents Act (1979) or has not been enacted. 

The SRA proposes to remove reference to the legal requirements, from the current rules, subject to the Financial Conduct Authority’s approval. The revised rules will not allow solicitors to provide regulated financial services to the public outside non-LSA regulated firms under the SRA regulatory remit.

Enforcement Strategy

The draft strategy does not create new powers or sanctions but provides an explanation on how regulatory enforcement tools will be applied.  It is intended to act as a guide to the “expected behaviours” that underpin the SRA standards and deliver a “principle-based, flexible approach to enforcement”. The proposed strategy contains case studies and a new “sanctions and controls” table to guide solicitors and firms. It takes into account the following factors: intent, harm caused, patterns of behaviour, vulnerability of the client, seniority of the solicitor, criminal convictions and any remedial action taken.

The SRA also consults on a new set of Disciplinary Rules that are broader in scope, and covers the SRA approach to assessment and investigation of all complaints, but does not create any new powers or sanctions.

Next steps

The Law Society will be submitting a response to the consultation and would like to hear your views about the possible impact of these proposals.  If you want to give your feedback please email us on marzena.lipman@lawsociety.org.uk  

 

 

 

 

 

 

 

 

 

 

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About the Small firms Division

Your Small Firms Division is dedicated to meeting the needs of all smaller legal businesses, including sole practitioners.

See our 2016/17 Engagement Programme