Complaint Resolution Compliance Solutions
Welcome to our first newsletter! We will be providing an overview of the ever changing compliance landscape, with articles relating to you and your business.
CRCS Legal has the expertise to help with all of your compliance needs, please feel free to contact us to discuss what your firm needs to stay ahead with compliance: 0330 2210511 or enquiries@crcslegal.com
Increase in SRA Fining powers.
The cost of non-compliance is increasing and CRCS Legal is here to help.
On the 22 July 2022, the Ministry of Justice increased the SRA’s fining powers from £2,000 to £25,000 for “Traditional” firms and the solicitors who work in them. The SRA can already impose fines on Alternative Business Structures of up to £250 million and £50 million for individuals.
The SRA has unlimited fining powers for Solicitors and their firms who are found to be involved in Financial Crime or Strategic Lawsuits against Public Participation (SLAPPS).
The SRA now want the power to make unlimited fines on all cases of serious misconduct. There was a further call from the SRA at the beginning of August 2023 after the Daily Mail sting on Immigration Lawyers.
If the SRA’s fining powers are unlimited for all serious misconduct it will dramatically change the disciplinary landscape and increase risk for all Firms. The risk is already high.
Fixed Penalties
The SRA have also introduced a schedule of fixed penalties for firms of up to £1,500. These will apply to a small number of “lower-level breaches” of the rules.
Examples of misconduct which may result in a fixed penalty include:
Failure to comply with a regulatory request for information – for example declarations of compliance with AML requirements, submitting your Firm Diversity Data return.
Failure to publish the required costs or complaints information, or display a clickable logo, in accordance with the SRA Transparency Rules.
Failure to ensure appropriate approval, or notification of, firm role holders.
The SRA say that Issuing of a fixed penalty does not remove the need to comply with the original issue and further enforcement action may result if non-compliance continues.
Recent SRA Decisions
The SRA are flexing their new fining powers:
£20,000 – A small two partner firm was fined £20,000 by the SRA for anti-money laundering (AML) Compliance breaches.
There was no practice wide risk assessment even though Conveyancing was 75% of their fee income. There was also a lack of independent audit function, failure to provide a partner with AML training and a failure to check source of funds.
£15,000 – A solicitor from a Bridgend firm failed clients subject to a deputyship order. It was found he did not manage their financial affairs or protect money or assets.
£12,000 – A solicitor failed to advise on conflicts of interest in commercial property transactions.
£7,500 – A Manchester PI firm failed to have direct contact with their clients who were introduced by a CMC (for 6 years!).
£9,000 – A solicitor was fined for allowing client account to be used as a banking facility. The COLP was also fined £9,000 as he was aware of the agreement.
£3,500 – Failure to comply with the Transparency rules, did not publish details of costs for motoring offences or the complaints procedure. Failed to display the SRA digital badge.
These are all decision from 2023 and the Firms or Solicitors had to pay SRA costs as well as the fine.
The Fall Out
In addition to the direct financial costs there are many other consequences for you and your business.
· Professional Indemnity Insurance.
Your premiums could increase, your existing insurer could refuse to renew, and it may be difficult to find new cover.
· Reputation
The SRA usually publishes their decisions, and you could find yourself or your firm in the Legal Press for the wrong reasons. There could be reputational damage and difficulties attracting new business.
· Accreditations
Will this affect your CQS or Lexcel accreditations? If your CQS accreditation was lost or suspended, will you lose you conveyancing panel membership?
The risk of non-compliance is real, serious and costly. Are you compliant?
New Suspicious Activity Report (SAR) Portal
Everyone working in the regulated sector are required under Part 7 of the Proceeds of Crime Act 2002 (POCA) and the Terrorism Act 2000 to submit a SAR in respect of information that comes to them in the course of their business if they know or suspect or have reasonable grounds for knowing or suspecting, that a person is engaged in, or attempting, money laundering or terrorist financing. The SRA expect all firms and individuals regulated by them to comply with the NCA guidelines in relation to submitting SARs.
Even if you are not in the regulated sector, you may have an obligation to submit a SAR. You may commit an offence if you have ‘knowledge’ or ‘suspicion’ of money laundering activity or criminal property, do something to assist another in dealing with it, and fail to make a SAR.
A new SAR portal will be launched by the National Crime Agency (NCA) on the 18th September 2023. All organisations will need to register to the new SAR Portal. A link to register to the new SAR Portal will be made available upon launch.
This will include organisations that previously had a SAR Online account. The new portal will replace the legacy SAR Online system which will be decommissioned this year. So, even if you have previously registered for the legacy SAR Online System, you will still need to reregister for the new SAR Portal.
The NCA have provided very useful information on their website:
· Home – National Crime Agency
· New SAR Portal Guidance (nationalcrimeagency.gov.uk)
· Suspicious Activity Reports – National Crime Agency
Practicing Certificate renewal and continuing competency
The window for the renewal of practicing certificates is open from 1 October 2023 to 31 October 2023.
As part of the renewal process, you must be able to sign the SRA competency statement.
The SRA published their Annual Assessment of Continuing Competency on the 2 August 2023.
The SRA analysed a range of information, including:
- data from reports made to the SRA alleging incompetence about a solicitor or firm.
- findings from their most recent thematic reviews
- findings from their wider checks on training and supervision arrangements.
The SRA found that conveyancing and probate generated the most concerns.
The SRA are to increase their efforts to ensure that Firms and individuals are complying with their continuing competency obligations.
Are you aware of your continuing competency obligations? Are you sure that the individuals you manage are competent to carry out their roles? Are your training records up to date?
Legal Ombudsman Report
The Legal Ombudsman (LeO) has published its latest report looking at complaints trends in 2021/22; The headlines are:
• Complaints accepted: 5,230 (4,572 – 20/21)
• Complaints resolved: 6,519 (4,758 – 20/21)
Accepted Complaints
· 35% – residential conveyancing
· 20% – other (Criminal Law, Employment, Immigration, Social Welfare, Accident Management
· 14% – personal injury
· 12% – wills & probate
· 12% – Family
· 7% – Litigation
There are some interesting case studies in the report.
How we can CRCS Legal Ltd help?
The risk of non-compliance is real, serious and costly. We can provide:
A comprehensive compliance and web-site health check. A thorough look at your policies and procedures with solutions for any non-compliance.
Technical compliance support on an ad hoc or retainer basis. This will give you direct access to compliance professionals.
Complaint handling and assistance with the Legal Ombudsman (LeO) We can investigate the complaints, make recommendations and draft your complaint response. We have years of experience of dealing with Le0.
Compliance training – one off training courses and comprehensive training programmes. We can help you comply with the SRA’s continuing competence requirements.
File reviews and audits – detailed and in-depth reviews in accordance with the SRA supervision requirements.
Bespoke Compliance policies, procedures and templates.
Assistance with Lexcel accreditation and visits
Anti-Money Laundering (AML) – a review of procedures and policies update
Transparency rules – Are you publishing the correct costs and complaints information?
GDPR and the ICO – including managing data breaches and SARs.
Advice on PII renewal
Assistance with SRA investigations and prosecutions
Merger and Acquisitions- assessment of regulatory compliance issues and due diligence.
Take control of your risk and contact us today for a confidential free no obligation discussion: 0330 2210511 or contact us via enquiries@crcslegal.com
