Is your law firm ready for the SRA’s latest thematic review?
The Solicitors Regulation Authority (SRA) recently commenced its thematic review into how firms and their staff have adapted to the Standards and Regulations (STaRs) that were introduced back in November 2019; the initial contact is through a short anonymous survey to obtain general feedback about the new regime and how it has bedded in.
If previous thematic reviews are anything to go by, once the initial feedback has been collected and reviewed, a sample of firms will be contacted via email asking specific questions about how they as individual businesses have coped; it would not be a surprise if firms were asked to send the SRA copies of various policies and their answers to specific STaRs related questions to see whether they have an appropriate understanding of their regulatory and compliance obligations.
So, what areas are likely to be the focus for the SRA?
As the Principles comprise the fundamental tenets of ethical behaviour the SRA expects all firms to uphold, this is likely to be the starting point for the review, with areas such as integrity, equality and diversity, and acting in the best interests of clients, being at the fore.
Codes of Conduct
The initial areas that are likely to come into focus for the SRA are those based around how firms manage their compliance and client money obligations, for example:
- Compliance and business systems
- Cooperation and accountability
- Compliance Officers
- SRA Accounts Rules
Subject to what it finds in the initial stage of its review, the SRA may widen its review to cover other areas and consider whether an onsite visit would be appropriate.
Evidence that could be requested
If this review follows the same path as previous reviews firms are likely to be asked to send the SRA evidence to show how they are complying with their obligations, for example:
- Business and management structure (demonstrates how the firm is structured and who holds management responsibilities)
- Compliance records (policies and registers (complaint, negligence claims, suspicious activity reports, etc.))
- Financial plan (demonstrates whether the firm is financially and structurally viable)
- Risk register (demonstrates that the firm’s managers have identified and are managing material risks to their business)
- Training records (these may instead be requested as part of the current ongoing review looking into solicitors’ competency)
- Breach/incident register (used to record any serious breaches or other reportable incidents)
It is critical that you can evidence what you have done to show compliance with the STaRs, so if you have not done so in the past, or your records have been maintained on an ad hoc basis, now is the time to correct the position.
It is also important for you to document your business decisions and why you made them, even if the decision is not to change something, for example, when you review your AML practice wide risk assessment you must document when you reviewed it, what you changed, and if no changes were made, why this was.
Remember, just because your firm may not have been reviewed by the SRA in the past, doesn't mean it won't be in the future, and even if it has been recently reviewed doesn’t mean it won’t be again; it only takes one review to ruin your day!
