The headline finding: 41% of firms had incomplete records
The SRA examined 25 firms and found that:
41% maintained only partial breach records.
In many cases, these records lacked:
- The circumstances of the breach
- The rationale behind decisions
- Details of remedial action
- Any assessment of risk or seriousness
This isn’t just poor administration.
It means firms are unable to justify their decisions if challenged by the regulator.
Why documentation is fundamental to compliance
Documentation is not a box‑ticking exercise. It underpins:
- Regulatory defence
- Risk management
- Accountability
- Transparency
Without full records, firms cannot:
- Demonstrate compliance
- Show reasoning behind decisions
- Identify trends or patterns
- Learn from past mistakes
In short: no records = no protection.
The missing systems problem
The SRA also found structural failures in how firms store and manage compliance data:
- 11% of firms had no system at all for storing reports
- 17% had no internal reporting policy
- Some relied on scattered emails or inconsistent folders
This raises a fundamental question:
What is the point of documenting breaches… if you can’t retrieve or evidence them?
In today’s environment, where technology is widely available, this is not just surprising - it’s avoidable.
The verification gap: trust without testing
One of the most dangerous findings is what Brian calls the “verification vacuum.”
- 11% of firms had no process to check staff compliance with policies
- Yet 94% of firms had office manuals in place
The result?
Policies exist - but nobody checks whether they are followed.
Many firms rely heavily on trust.
But as experience shows, trust without verification creates risk.
Without proper controls:
- Errors go undetected
- Misconduct can develop
- Breaches can become systemic
In extreme cases, unchecked trust can lead to serious financial misconduct.
File reviews: a missed opportunity
File reviews are one of the most effective tools for monitoring compliance.
The SRA found:
- 83% of firms conduct file reviews
- But many are ad hoc and inconsistent, not systematic
This creates a missed opportunity.
Done properly, file reviews can:
- Identify emerging risks
- Highlight training needs
- Detect compliance breaches early
- Improve supervision
But when treated as a tick‑box exercise, their value is lost.
When systems exist but aren’t used
Another critical issue is under‑utilisation of existing systems.
Many firms have:
- Case management systems
- AML fields and workflows
- Digital compliance tools
Yet in practice:
- Fields are incomplete
- Processes are bypassed
- Systems are used only partially
This creates a false sense of security.
Having a system is not enough.
Compliance depends on how well systems are used, not whether they exist.
Training and competence failures
The documentation problem extends into training and competence:
- 19% of COLPs had no learning and development records
- Only 44% could evidence compliance training in the past year
- 25% had no compliance training at all in 12 months
This raises a critical issue:
How can firms demonstrate competence without documented training?
The SRA expects evidence - not assumptions.
And without records, firms cannot:
- Prove ongoing competence
- Support practising certificate declarations
Evidence compliance with training requirements
The risk: from weak records to regulatory action
Poor documentation has real consequences.
When records are incomplete or inconsistent, firms risk:
- Failing SRA audits
- Inability to justify decisions
- Increased likelihood of enforcement action
- Professional indemnity exposure
- Reputational damage
As Brian summarises:
This isn’t compliance - it’s a paper trail of negligence waiting to be discovered.
A wider issue: intelligence and oversight
Interestingly, the issue is not limited to firms.
The review also highlights a gap at regulatory level:
- The SRA identified 1,377 internal reports across firms
- Only 9 were reported externally
- But the regulator does not maintain centralised records of breaches
This raises questions about:
- How trends are identified
- How intelligence is used
- Whether systemic risks are fully understood
The bigger picture: compliance without evidence
Episode 5 reveals a core truth:
Compliance without documentation is not compliance.
Across the series so far, we’ve seen:
- A role nobody wants
- A lack of knowledge
- A lack of time
- A mental health crisis
- And now, a failure to evidence compliance itself
This is not a series of isolated gaps.
It is a system under strain.
Final Thoughts
Documentation is often seen as administrative.
In reality, it is the foundation of compliance.
Without it, firms are exposed.
Because when the SRA asks:
- What happened?
- Why did it happen?
- What did you do about it?
The only acceptable answer is not:
“It’s in someone’s head.”
It’s:
“Here is the evidence.”
Next Episode: The Succession Crisis
In Episode 6, we explore:
“The Succession Crisis – When Your COLP Leaves Tomorrow”
We’ll cover:
- Why 44% of firms have no deputy
- The risks of sudden departures
- Why succession planning is failing
- What happens when nobody wants the role
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