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Do you have a compliance plan?
19 January 2012

Chapter 7 of the Code of Conduct and Rule 8.2 of the Authorisation Rules require firms to have suitable compliance arrangements. Note (iii) to Rule 8 sets out some examples of what the SRA considers should be covered by a firm’s compliance plan.

There is no explicit requirement to have a compliance plan as such. However, Outcome (7.1) requires a clear and effective governance structure and reporting lines which provide a transparent framework of responsibilities within the firm. Governance is essentially a commitment to business ethics, risk management and good practice. It involves not only having effective policies and procedures, but also proper auditing and review. A starting point is to have a compliance plan which provides a clear statement of compliance intent. Without a written compliance plan, a firm might struggle to persuade the SRA that it is aware of the compliance issues it needs to address and that it is taking appropriate steps to deal with them. The plan should set out the firm’s governance arrangements and how the firm intends to maintain and review compliance. It should also cover the compliance duties of the Compliance Officer for Legal Practice (COLP) and the Compliance Officer for Finance and Administration (COFA) together with other roles within the firm.

The SRA has warned firms against being attached to the old 2007 Code and said that firms would be running a risk if they adopted a ‘painting by numbers approach’ and as a result failed to deliver ethical and competent practice. The SRA is looking for genuine, contextualised engagement with the Principles and Outcomes. Many firms do not appear yet to have considered all the changes that they need to make to ensure that they comply. With the Handbook having been in force since last October, firms should not be waiting until their COLPs and COFAs take up their reins of office at the end of October this year to deal with these issues. Having a robust compliance plan will help firms demonstrate that they are working towards full compliance and that they are adopting a systematic and effective approach towards achieving compliance.

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