Law Society supports SRA’s consumer protection aims but cautions proposed measures may fall short

News

The Law Society of England and Wales is supportive of the Solicitors Regulation Authority (SRA) strengthening consumer protection and improving the robustness of the client money framework.

Since July 2024, the SRA has been consulting on ways to reduce risks to client money and ensure clients are protected when using regulated law firms, to help maintain public confidence and trust in legal services.

The recent consultation seeks feedback on improving the accountants’ reports regime and strengthening checks and balances provided by compliance officers in law firms.

The Law Society’s response to the SRA consultation highlights:

• broad support of the proposals on improving the accountants’ reporting regime and the enhanced support package for compliance officers, recognising the value this could bring in improving standards
• objections to the proposed separation of compliance roles which is complex and impractical and would impact small and medium sized firms unfairly by increasing costs which are likely to be passed on to consumers and impact access to justice. The SRA should focus on gathering data to highlight and manage risk better instead of requiring a separation of roles, which is unworkable in smaller firms
• evidence that many of the proposals risk disproportionately affecting Black, Asian and minority ethnic solicitors, legal aid and sole practitioners, which would in turn negatively impact the communities they serve
• concerns about the use of fixed financial penalties, which may create unintended risk or delay and could unfairly penalise firms for failures outside their control

Law Society vice president, Brett Dixon, said: “We support the SRA’s ambition to strengthen consumer protection and enhance the robustness of the client money framework. Restoring the historical safeguard that requires firms holding client money to submit annual accountants’ reports to the regulator is a sensible and necessary measure.

“It is essential that all firms, including those currently exempt from filing accountants’ reports file an annual declaration and that accountants can obtain routine bank confirmations to verify a list of client accounts. These are proportionate steps that meaningfully enhance monitoring and protect clients.

“The SRA’s success will depend on the regulator having adequate resourcing, technical capacity, and a clear plan for triage and follow up.

“We welcome continued engagement with the SRA to ensure they improve client protection without undermining the diversity and accessibility of the profession.”

Notes to editors

Read the:

• SRA’s consultation on client money in legal services
• Law Society’s full client money in legal services consultation response