|
|
|
Out of Balance Regulation ?: The SRA and the five principles of good regulation: |
|
|
|
One of Vanessa's articles published in the Cardiff & District Law Society’s Croeso magazine in April 2008 questioning, with examples, the SRA’s compliance with the five principles of good regulation.
Out of Balance Regulation?: The SRA and the five principles of good regulation
Cardiff & District Law Society’s Croeso magazine
April 2008In January 2008, I wrote a letter to the Gazette in response to an article entitled “Open and accountable’ by Peter Williamson, the Chair of the Solicitor Regulation Authority’s main Board. I questioned whether its policy to make regulatory decisions public in the interests of “transparency”, actually accords with the government’s five principles of good regulation that the SRA aspires to.
The government’s five principles are – proportionality, accountability, consistency, transparency and targeting. From a brief read on the Better Regulation Commission’s Website, it can be seen that, in the main, these are inwardly facing principles, there to govern a regulator’s relationship with those it regulates, rather than necessarily the public interest (albeit that this is understandably important from a regulator’s perspective).
Those interested can see a copy of that letter on my website. I thought it might be useful to expand on one of two of these principles, bringing in some examples.
Under ‘proportionality’, regulators should not use a ‘sledgehammer to crack a nut’. Under targeting, ‘enforcers should focus primarily on those whose activities give rise to the most serious risks’.
Consider these principles from the perspective of a solicitor who discovered that she had an old client account containing about £5.70 and Solicitor Accounts Rules returns had not been made since setting up a limited liability firm about three years ago. The solicitor and her accountant apologised to the SRA and immediately dealt with the money appropriately.
The SRA recently published its proposal that small amounts of client money, under £50 will (subject to future Rules) be able to be sent to the Solicitor’s Benevolent Fund, without having to get permissions from the SRA. One might have expected no action or possibly a Letter of Advice, both of which options are available to the SRA. However, this solicitor received a formal Warning and was ordered to pay the cost of the investigation at £300. She had a discretion vested in her practising certificate so that on the next renewal round any appropriate conditions could be imposed. When she came to renew her practising certificate she had to pay an additional £200 over the normal fee before her application for herself and her qualified staff would be considered.
Consider a firm in December who went to the Solicitors Disciplinary Tribunal on the single issue of misdescribing their telegraphic transfer fees as "disbursements”, when not the entire sum was paid to the bank. No dishonesty was formerly alleged, but the view of the SRA is that this is making a "secret profit”- with all the connotations of impropriety that such a phrase might suggest. It is not a simple misunderstanding of how to describe an administration fee, which the Solicitor Accounts Rules say is a perfectly legitimate charge to make.
That particular firm was visited back in November 2005, by the Forensic Investigation Unit (FIU) of the SRA. The firm changed their procedures immediately. However, the approach of the FIU was that this was so serious an issue that it had to go forward to the SDT. The firm was not on that occasion visited by the Practice Standards Unit (PSU) of the SRA. The approach of the PSU at that time was to advise and indeed require firm’s to change their description but to take no further action.
From the firm's perspective (and mine as expert witness in the case) the regulatory response depended, not on the seriousness of the issue, but upon which Unit within the SRA conducted the visit to their firm.
Under the principle of consistency ‘regulation should be predictable in order to give stability and certainty to those being regulated’. Also under transparency, ‘those being regulated should be made aware of their obligations, should be given the time and support to comply’, and ‘the consequences of non-compliance should be made clear’.
These are just two examples of many, but they are useful because they explain both ends of the regulatory spectrum and perhaps demonstrate a hardening in the approach of the SRA.
I was recently asked to assist a firm who had been visited by the PSU in 2007 to find that they faced a recommendation of a referral to the SDT under similar circumstances to the firm mentioned above.
Much of the evidence is, of course, anecdotal. However, in the monthly Summary of Performance on the Law Society's website, the number of FIU visits which have resulted in “adverse reports” (which would attract some kind of regulatory response) increased from 56% in December 2006 to 71% in December 2007.
It must be remembered that the PSU are able to make both formal referrals through to other regulatory units within the SRA, which solicitors will be aware of, but also "intelligence" referrals which the PSU officer will not disclose to the firm.
|
|
New Publication: Preparing for a Practice Standards Unit Visit
Please click here to view more details.
Please note that the publisher’s full recommended retail price is
£195.00 plus postage and packing. To buy this book prior to 15 March 2010 at £95 plus postage and packing
This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
|
