The Solicitors Regulation Authority (SRA) has issued its first fixed penalty fine to a law firm for a breach pertaining to compliance officer rules, a decision that underscores the authority’s commitment to upholding legal sector regulations.
Hathaways Law, a legal firm located in Gateshead are the first law firm to be handed a fine like this from the SRA. The firm’s failure to promptly update the SRA regarding the status of its compliance officer for finance & administration stands in breach of paragraph 3.8(a) of the Code of Conduct for Firms. This incident not only casts a spotlight on Hathaways Law but also serves as a stern reminder to all law firms of the critical importance to maintain updated records with regulatory bodies.
The SRA’s act of enforcement follows in the wake of previous £750 fines imposed for non-compliance with transparency rules and lamentably, for a firm’s failure to submit its workforce diversity data by the stipulated deadline.
The Imperative of Prompt Notification
The SRA mandates that firms are obligated to swiftly communicate any material alterations to the information supplied about their compliance officers. The breach committed by Hathaways Law was further emphasised by the firm’s inability to rectify the issue post-receipt of notice.
Should Hathaways Law breach the law a second time within the next three years, the fine escalates to £1,500, marking the SRA’s intention to intensify penalties in response to repeated non-conformance.
There is clear evidence to suggest the SRA has been proactive in its effort to enforce adherence. By deploying a new fixed penalty system aimed at efficiently addressing lower-level breaches, the SRA utilises its own resources while emphasising compliance to law firms.
As stressed by the SRA, the initial step involves issuing notices of potential penalties, with an emphasis on providing firms the opportunity to resolve the identified issues. This initiative has yielded success with many firms amending their ways in light of new legislation.
Paul Philip, the Chief Executive of the SRA, elaborated on the intent behind fixed penalties, highlighting the advantages of a swift resolution process that spared involved parties from undue time consumption, cost outlay, and stress.
The Public Interest and Transparency Rules
Philip affirmed that public interest stood at the forefront of the SRA’s objectives, stressing the importance of transparency rules. These rules play a pivotal role in enabling consumers to compare and make informed decisions when selecting law firm services. For firms diligently adhering to disclosure obligations, the expectation is clear with enforcement against non-compliant competitors validating their efforts to sustain a level playing field.
Furthermore, the collection of workforce diversity data emerges as more than a procedural formality. This data is instrumental in gauging progress within the sector and empowers firms to measure their standing against aggregate benchmarks. As per Philip’s remarks, the provision of such diversity data poses minimal difficulty and is embedded as a regulatory imperative.
The SRA Stance Makes AML Compliance Even More Vital
Another domain where the SRA’s fixed penalties come into play is in response to lapses in completing mandatory anti-money laundering data submissions. As can be discerned from recent actions, this enforcement approach has catalysed increased compliance within the sector.
The SRA is currently poised to expand fixed penalties to minor anti-money laundering system and control failings. Though this consultation will take place later this year. It is anticipated that penalties could be more severe with the SRA determined to enforce anti-money laundering regulations.
Law firms and practitioners must be fully aware that any lapses in compliance will be met with assertive action as the SRA continues to clamp down on AML compliance. With compliance more even more vital, law firms will be utilising every tool available to tackle the issues including innovative technology products like Verify 365, a client onboarding platform which allows firms to performance efficient client information checks and crucially remain compliant within SRA guidelines.
