By David Young-
The Solicitors Regulation Authority’s fining powers are to be increased from £2,000 to £25,000, following a consultation and a recommendation from the Ministry Of Justice.
The increase is to establish deterrents to clamp down on misconduct from law firms and solicitors
Updated measures will allow cases to be resolved quicker.
The changes mean the SRA will now be able to fine law firms and individual solicitors for a broader range of offences – from lower-level cases involving inadequate staff training to those with more serious consequences including failure to implement the appropriate checks required to uncover signs of money laundering by clients.
Previously, disciplinary matters requiring fines over £2,000 would be referred to the independent Solicitors Disciplinary Tribunal (SDT).
Given nearly 90 % of fines currently issued by the tribunal are under £25,000, these reforms will allow them to focus on fewer, more significant allegations, like firms working for sanctioned Russian oligarchs and businesses.
The increase in fines follows a public consultation launched last year on proposed changes to our current approach to issuing penalties. The aim of these proposals was to ensure a robust approach in place which protects the public, provides a more appropriate deterrent and ensures cases can be resolved much more quickly – reducing costs and stress for all involved.
More than 7,500 people who engaged with the consultation were generally in favour of the principles outlined, including the public, profession and their representative groups, although some did provide differing views on the detail of how specific proposals would be implemented.
Based on the feedback received, the SRA said it will now move ahead with plans to take into account, in all cases, the turnover of firms and financial means of individuals when setting fines
seek an increase to the maximum fine we can issue internally to traditional firms, and those working in them, from £2,000 to £25,000.
A spokesperson for the SRA told The Eye Of Media.Com; ‘The new powers to increase fines makes costs a lot cheaper if we can impose them without having to go to the tribunal. The key thing with raising the fines is that it makes everything resolved quicker for not just the offending solicitors when a case has to go to the tribunal, but also for the victims”.
The SRA added that it will also amend its guidance to highlight that for cases involving sexual misconduct, discrimination or any form of harassment, financial penalties will only be considered in exceptional circumstances, with restrictions on practice, suspension or strike off the more appropriate sanction.
”we felt that a financial penalty for serious cases was not enough, and that a striking off is necessary in cases of sexual harassment or discrimination. This does not mean such cases cannot also include a fine, it just means that a fine is considered too little”.
It will also introduce a schedule of ‘fixed penalties’ for lower-level breaches – enabling cases to be dealt with more quickly for all concerned.
This included feedback that the SDT regime provides more confidence due to greater transparency and independence, while an increase in our fining powers risked a misalignment with the SDT’s approach.
The SRA have committed to greater alignment with the SDT to develop updated guidance on financial penalties, and the new rules that support the introduction of a fixed penalties scheme.
The SRA also said it will also be looking to develop our processes to increase transparency. This includes consultation on the publication of regulatory decisions, to make sure that information about our decisions is accessible, clear, transparent, and consistent.
It will also do further work to explain the checks and balances in place in our processes. We will communicate the safeguards in place, including our use of separate adjudicators in decision making, and the options to appeal decisions, including appealing SRA fines to the SDT.
Other examples of where feedback during the consultation helped shape our final proposals included commissioning independent research on whether turnover was the best metric against which to consider firm fines.
Retaining the option to consider if a financial penalty is most appropriate for specific cases of sexual misconduct, discrimination or harassment, but only in exceptional circumstances
recognising that firm misconduct is distinct from individual misconduct, and a financial penalty may be appropriate where poor systems of controls allow poor behaviour to occur or persist
Anna Bradley, SRA Chair said: ‘The overwhelming majority of solicitors meet the standards we all expect, but when they don’t, we step in to protect the public and maintain confidence in the profession. These changes mean we can resolve issues more quickly, saving time and cost for everyone and, importantly, reducing the inevitable stress for those in our enforcement processes.
‘It was good to see broad support for our proposals, as well as getting feedback that has helped us refine our approach. It is vital that everyone can be confident that our approach is fair and transparent.’
The ability to take account of turnover or individual income in setting fines would allow different levels of fine to be issued to a low-earning junior solicitor compared to a senior equity partner for similar offences.
The timing of the implementation of the new measures is imminent.
Increasing our fining threshold to £25,000 would mean more disciplinary matters could be dealt with by us directly without being referred to the Solicitors Disciplinary Tribunal (SDT). Not only enabling cases to be resolved more quickly, but also freeing up the tribunal to focus on more complex issues.
A further consultation will also be held later this year on the detail of how a new fixed penalty regime would work. Such penalties would mostly deal with lesser or administrative breaches – such as failures to comply with requests for information or requirements under the SRA Transparency Rules.
In terms of both fines and fixed penalties, solicitors and firms would retain the right to appeal any outcome or penalty imposed at the SDT.
Our fining regime was introduced ten years ago. Since then there have been significant changes, including the 2019 introduction of a new Enforcement Strategy and the SDT adoption of the civil standard of proof in line with that used by the SRA. The limit for fines applies to ‘traditional’ law firms. For alternative business structures, the SRA can fine up to a limit of £50 million for individuals and £250 million for firms
Deputy Prime Minister, Lord Chancellor and Secretary of State for Justice, Dominic Raab said:
The UK can be proud of our world-leading legal services. But it is essential the sector retains its international reputation for the highest standards of probity.
That’s why we are allowing swifter and firmer action to be taken against those who break the codes of conduct. And we’re freeing up the solicitors’ disciplinary tribunal to focus on the most serious breaches, such as those involving Russian sanctions.
The increased powers will reduce the number of cases referred to the SDT, shortening the average time taken for cases to be resolved.
Anna Bradley, Chair of the Solicitors Regulation Authority, said:
‘The overwhelming majority of solicitors meet the standards we all expect, but when they don’t, we step in to protect the public and maintain confidence in the profession.
There was strong public support for increasing our fining powers when we consulted last year and this change will mean we can resolve issues more quickly, saving time and cost for everyone. It will reduce stress and allow more focus on the most complex and challenging or serious cases.
The SRA investigates almost 2,000 cases annually and handed out over 250 fines in the last year, which is only set to increase as the changes take effect. They will continue to refer firms and solicitors to the tribunal in the most serious cases.