All recognised and licensed bodies must have in place a compliance officer for legal practice (COLP) and a compliance officer for finance and administration (COFA).
Our practice note on compliance officers outlines who can be a COLP and COFA, what the COLP/COFA roles entail, reporting requirements and information on personal liability.
Some frequently asked questions about COLPs and COFAs:
Do COLPs and COFAs have sole responsibility for compliance in a practice?
No. The roles of compliance officers are a fundamental part of a practice’s compliance and governance arrangements but all individuals in a practice have a role to play in complying with the regulatory requirements and, ultimately, compliance is the responsibility of the practice’s management.
COLPs and COFAs have a key role in ensuring that systems and controls are in place. and in reporting material issues to the SRA; to this end they need to work closely together. Read our practice note for further information, including on personal liability.
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What do COLPs/COFAs need to record?
COLPs and COFAs must take all reasonable steps to record all failures of a practice to comply with authorisation or statutory obligations, and make such records available to the SRA on request. These requirements are set out in Rule 8.5 (c)(i) and (e)(i) of the SRA Authorisation Rules.
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What breaches do COLPs/COFAs need to report?
COLPs and COFAs must, as soon as reasonably practicable, report breaches in compliance to the SRA (Rule 8.5 (c)(ii) and (e)(ii) of the SRA Authorisation Rules.
However, in the case of non-material breaches, practices will still be deemed compliant if they are reported as part of the information report required under Rule 8.7 of the Authorisation Rules (the annual report). More information on what constitutes a 'material' breach can be found below.
Please note that the SRA is reviewing this requirement. Subject to SRA board approval, the requirement will be changed so that practices' would not need to annually report their records of non-material breaches to the SRA. However, records will still need to be kept in order to support the identification and management of systemic risk issues.
Read the SRA announcement.
COLPs and COFAs must remember that the SRA Code of Conduct 2011 covers a wide range of issues including business management and financial stability.
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What is a ‘material’ breach?
When deciding if a breach, or series of breaches, is material, COLPs/ COFAs should consider:
- the detriment, or risk of detriment, to clients
- the extent of any risk of loss of confidence in the practice or in the provision of legal services
- the scale of the issue
- the overall impact on the practice, its clients and third parties.
While a single breach may be trivial, if it is a part of a series then it may be material. For this reason, compliance officers will need systems to identify patterns of breaches.
What is 'material' will depend on your practice and the circumstances around possible failures to comply with the SRA Authorisation Rules. The SRA will judge each case on its own merits.
Read our practice note on compliance officers.
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COLPs must “take all reasonable steps to ensure compliance with any statutory obligations of the body”. How extensive are the obligations under this provision?
COLPs must ensure compliance with the relevant parts of the Solicitors Act 1974, Administration of Justice Act 1985 and Legal Services Act 2007, and any delegated legislation (ie most of the SRA Handbook) made under those Acts. A COLP should satisfy themselves as to which parts of those acts are relevant to their practice.
However, this does not obviate the need for COLPs to be alert to other statutory breaches which may render them liable in the absence of a suitable procedure to manage the risk associated with the breach and ensure compliance, eg the Proceeds of Crime Act 2002 or the Data Protection Act 1998. COLPs must manage the risks of statutory non-compliance elsewhere, ie principle 7 and outcome (7.5) in the SRA Code of Conduct.
This question was considered by the Law Society's Compliance Reference Group.
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What happens if a COFA becomes aware of cash flow problems or that the practice is in financial difficulty?
While the authorisation rules highlight that the COFA's role is in relation to the SRA Accounts Rules, the SRA's quick guide to outcomes focused regulation also implies that there is a role for the COFA in reporting when the practice is in serious financial difficulties.
The COFA should consider whether they are able to access information on the practice's overall financial status, and should be in a position to make an assessment of that status.
There is no definition of 'serious financial difficulty'. It could include being unable to pay staff or suppliers, cash flow problems or when the practice becomes overdrawn or is unable to make loan repayments.
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Must COLPs/COFAs be an employee of the practice?
Yes. COLPs and COFAs must be either managers or employees of an authorised body.
An authorised person is 'a person authorised by the SRA or another approved regulator to carry on a legal activity and for the purpose of these rules includes a solicitor, sole practitioner, a Registered European Lawyer (REL), a Exempt European lawyer (EEL), a registered Foreign Lawyer (RFL), an authorised body, an authorised non-SRA firm and a European corporate practice' (Part 1 of the Authorisation Rules).
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Does each entity of an English and Welsh headquartered firm, operating globally, need to have its own COLP and COFA?
Rule 8.5 of the SRA Authorisation Rules requires that practices appoint a COLP and COFA for each authorised body. However, there is no such requirement to do so for overseas LLPs or partnerships which are not authorised by the SRA. In these circumstances, the COLP and COFA maintains global responsibility for compliance but only has day-to-day obligations in relation to those entities recognised by the SRA.
Where appropriate, a waiver application can be made to the SRA to allow COLPs and COFAs for the main (headquartered) entity to be assigned COLP/COFA status for an overseas entity.
This question was considered by the Law Society's Compliance Reference Group.
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Can a number of sole practitioners be supported by the same individual functioning in the COLP/COFA role?
No. Each authorised body must have an individual who is designated as its COLP and an individual who is designated as its COFA.
Are there any differences in the roles of COLPs/COFAs for smaller practices?
The same responsibilities apply to COLPs and COFAs regardless of the size of practice. However, the SRA has emphasised that what needs to be covered by a practice’s compliance plan will depend on factors such as the size and nature of the practice, its work and its areas of risk.
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Does an in-house practice need to appoint a COLP/COFA?
No. The compliance officer requirements are in the Authorisation Rules in the SRA Handbook. These Rules only apply to authorised bodies.
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Can a barrister be a COLP?
Yes. A COLP can be an individual who is a lawyer of England and Wales; a registered European lawyer or European lawyer regulated by the Bar Standards Board, and who is authorised by an approved regulator.
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Can non-lawyers in a practice be the COLP?
No. A COLP must be an individual who is a lawyer of England and Wales, a registered European lawyer or European lawyer regulated by the Bar Standards Board and who is authorised by an approved regulator.
A COLP may be able to delegate some of the day-to-day functions to other members of staff but the responsibility of the role cannot be delegated. More information can be found in our practice note on compliance officers.
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What happens when a COLP/COFA stands down from the role?
SRA approval of an individual in the role of COLP or COFA applies only to that individual. If a COLP or COFA stands down, a practice will need to nominate another individual and seek appropriate approval from the SRA. Information on nomination can be found on the SRA website.
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Is there a process for emergency approval of a COLP/COFA?
If an authorised body ceases to have a COLP or COFA for whatever reason, eg incapacity of the current COLP or COFA, the authorised body must immediately, and in any case within seven days, notify the SRA and appoint another COLP or COFA.
Where a compliance officer is likely to be absent for a significant length of time, they may need to be replaced. Your practice should discuss with the SRA whether appointing a replacement would be appropriate.
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