2020 - building up to be another very busy year for legal compliance

Key issues covered in our February compliance update webinar

• 5AMLD – these new regulations came into force on 10 January 2020, and not only introduced new requirements but also enhanced measures contained in 4AMLD.
  
  The SRA recently said that it will take into account the short amount of time between the laying of the legislation before Parliament and its implementation when considering enforcement action against firms; in the same announcement, it also indicated that as firms had known about the new legislation for some time it would also take this into account!
  
  Legal sector guidance is not due out for a number of months so firms will have to do the best they can until it appears. Read our blog.
  
  
• Reporting of serious matters to the SRA by non-solicitor employees – clarification is being sought from the SRA on this so that non-solicitor employees and firms are clear on what is expected of them. Read our blog.
  
  
• Scam email – the Council for Licensed Conveyancers has reported that a scam enforcement email is going around purporting to be from it and demanding payment to be made within 7 days; ignore it!
  
  
• Continuing competence – the Legal Services Board is calling for evidence in relation to this area as it has concerns over whether the current system achieves what it was aimed at achieving; the review could ultimately lead to all solicitors going through periodic revalidation in the same way as doctors and nurses do. Read our blog.
  
  
• Compensation Fund – the SRA is pressing ahead with plans to cut the upper limit for awards from £2m to £500,000.
  
  
• Taking clients on face value – this was a case of a senior solicitor being duped into a property fraud because he failed to carry out appropriate identity checks on the people involved in the transaction.
  
  
• Date warning – when dating documents be careful to show the whole date (1/1/2020) rather than an abbreviated version (1/1/20) as this could be changed to say 1/1/2019.
  
  
• Windows 7 – support for this system has now been withdrawn so firms still using it could face threats to their systems; both the SRA and PII insurers will take a dim view of firms failing to upgrade their systems and losses occur as a consequence. Read our two part blog series on cyber-risk (Cyber threats in law firms part 1 and Cyber threats in law firms part 2)
  
  
• SRA costs – if you were to face action by the SRA would you be able to pay the costs involved? Many firms could be crippled by such costs and therefore D&O cover should be considered.
  
  
• SRA AML declaration – COLPs had to make their declarations by 31 January 2020, but in so doing how many really appreciated what they were declaring? Read our blog.
  
  
• Bullying – LawCare recently published some concerning statistics in this area with 26% of the 900 people surveyed saying that they suffered from stress with 12% saying they suffered from depression; there were 80 reports of bullying (47 in 2018) equating to 12% of all contacts. Bullying behaviour is totally unacceptable and regulators are taking a tough stance where such allegations are made.
  
  
• Data breaches – a survey carried out by 2Twenty4 Consulting produced some interesting data from the top 150 firms, including that 48% of them had reported breaches, with 212 breaches!
  
  
• Conveyancing referral fees – these fees could be banned if a report due out very soon finds that the estate agency market has not become more transparent in this area; such a ban could have a similar impact as we saw with the ban on PI referrals so firms involved in such arrangements should be assessing how they can mitigate the risks of this.

It can be seen that 2020 is already becoming a real challenge for some law firms and with a number of anticipated SRA thematic reviews taking place during the year the pressure is unlikely to reduce anytime soon

---

Enjoyed the content in this piece? 

Register to join our monthly compliance webinar updates