The Solicitors Regulation Authority (SRA) has unveiled a series of significant proposals aimed at updating its fining framework, including the introduction of a minimum fine of £5,000 for law firms. The SRA also plans to abolish fines for solicitors convicted of drink-driving, signalling a shift in its regulatory approach.
Solicitors Regulation Authority Proposes New Fine Minimum
As part of its consultation, the SRA proposes that any fines imposed on law firms should start at a minimum of £5,000. This move is part of a broader strategy to address serious misconduct more effectively. The SRA’s new unlimited fining power, granted by the Economic Crime and Corporate Transparency Act 2023, will see an increase in fines exceeding 5% of a firm’s turnover, although fewer cases may go before the Solicitors Disciplinary Tribunal (SDT).
Addressing Economic Crime
The SRA intends to utilise its unlimited fining powers for cases involving economic crime. These cases may include criminal offences under the Money Laundering Regulations, violations of international sanctions, financial dishonesty, and theft. The power to issue these fines became effective in March 2024, following the enactment of the 2023 Act.
Proposed Fining Framework
The SRA’s consultation outlines a revised fining framework, which includes four penalty bands for various levels of misconduct. This is set to expand to six bands with the new powers. The proposed minimum fines for firms and individuals are as follows:
– Law Firms: £5,000 in the lowest band, rising to £500,000 in the highest.
– Individuals: £2,500 in the lowest band, increasing to £100,000 in the highest.
The consultation document acknowledges the significant impact these minimum fines could have on smaller firms and lower-paid individuals but maintains that they are necessary to reflect the severity of the misconduct. Firms and individuals will be allowed to make representations regarding their ability to pay any recommended fines. The SRA generally considers whether a fine can be paid within five years.
New Penalty Bands
Two additional penalty bands have been proposed:
– First New Band: 6% to 10% of a firm’s annual domestic turnover and 113% to 145% of an individual’s income.
– Second New Band: For the most serious misconduct where a fine is appropriate, exceeding the first band’s limits.
Despite fewer cases requiring SDT referrals due to the new fining powers, the SRA anticipates an overall increase in referrals due to higher fining levels. This reflects the SRA’s commitment to robust regulation and maintaining public confidence in the legal profession.
The SRA’s proposed changes mark a significant shift in the regulatory landscape for law firms and solicitors. By setting minimum fines and ending penalties for drink-driving convictions, the SRA aims to enhance its approach to serious misconduct and economic crime, ensuring that penalties are proportionate and effective.
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The SRA’s plan to increase the starting base of fines will intensify the pressure on law firms to ensure their practices are fully compliant and within the set guidelines.
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