The SRA published information about this in February 2023 to be brought into effect “later in the year”. This seems a sensible approach to streamline the process and save the profession expense. It also comes at a time when the SRA has been given powers to raise the maximum it can fine firms from £2,000 to £25,000. The Fixed Penalty approach seems to be gentle – with the SRA giving you notice to fix the breach and only fining when this is not done. Note that they are thinking of extending this into the area of minor breaches of anti-money laundering compliance requirements. Further information below.
The SRA have written:
“We said that we would develop a scheme that, in the first instance, covers a small number of breaches and limits the breaches in scope of the scheme to firms. We have identified the following breaches for inclusion in the scheme:
• failure to publish the required costs or complaints information, or display a clickable logo, in accordance with the SRA Transparency
• failure to provide information or documentation to us in response to any requests or requirements, for example failure to provide us with firm diversity data or to comply with requests for declarations of compliance with AML requirements
• failure to ensure approval of role holders, for example managers, Compliance Officer for Legal Practice (COLP) and Compliance Officer for Finance and Administration (COFA)
• failure to notify us of role holders, for example managers and owners who need to be approved by us for these positions.
This will allow us to monitor the operation of the procedures before considering other breaches that might be suitable for fixed penalties, for example straightforward breaches of anti-money laundering compliance requirements.”
The fixed-penalty process
Level 1: “Our proposed process will involve writing to the firm once a breach has been identified asking it to bring itself into compliance within a specified time. If after this time, the firm has not complied, the matter will be referred to an Investigation Manager who will issue a fixed penalty at level 1 (£750). The firm will be able to request a review of the fixed penalty only on the grounds that it was compliant within the specified time or that it did not receive our initial letter through no fault of its own. This would not apply if for example a firm had not updated its contact details or checked its email/spam folders. The firm also has the right to appeal to the SDT. “
Level 2: “If after the issue of the fixed penalty, the firm does not bring itself into compliance within a specified time, or it is found to be non-compliant again for the same type of breach, within three years from the initial penalty, we will follow the same process set out above, but the penalty issued will be at level 2 (£1500). “
Level 3: “If after this, the firm continues not to comply, or is found to be in breach for a third time, the matter will be referred to our investigation and supervision team for further investigation and consideration of any appropriate sanction. We will also retain the discretion not to follow our fixed-penalty process in appropriate circumstances. This might arise for example where we have concerns about the systems and controls in place at a firm, meaning a wider investigation and a bespoke sanction is appropriate, or where we identify a pattern of non-compliance over a period of time. Costs: We propose that we will charge a fixed cost of £150 in relation to all fixed-penalty decisions. This reflects the minimum cost to the SRA in each case – some cases might cost more. We think it is appropriate that we recover these costs (which would otherwise fall on the wider profession to meet) from the respondent firm.”
Remember that the SRA are also talking about publishing more information about misdemeanours. So, although the fine might be low, it won’t be great to have your breach published on your firm’s record on the SRA website.
We provide a wide range of support for SRA regulated firms: https://www.hunningsconsultancy.co.uk/compliance-services/
This ranges from assistance with compliance with the
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