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SRA warns of non-compliance trap in tough financial times
6 June 2013

The Solicitors Regulation Authority (SRA) has warned law firms of the temptation of straying from the compliance path as the tough economic climate continues.

SRA Chief Executive Antony Townsend has told delegates at the “Compliance and the role of the COLP and COFA ? six months on” (CLT Conference) of the link between difficult financial conditions and higher rates of regulatory breaches. The conference, held at the Holborn Bars De Vere Hotel in London, heard that there is a clear link between the good times for legal services and levels of compliance, but when market conditions are more testing, the statistics change.

Antony Townsend said: “When market conditions are tough and financial problems begin to bite, individuals who are usually principled and ethical can succumb to pressures and temptations, getting drawn into schemes and poor practices that put their clients, their businesses and their future at risk. The large majority of legal professionals act scrupulously even when the going is tough. In the last week I have seen an example of an individual who, despite having to close a firm in distressing circumstances, has acted with the highest standards in her clients’ interests, and co-operated fully with the SRA.

“But some will succumb, and this is a real concern for us. If the firms who give in to these pressures act in a way that is not in the interests of their clients, then these clients are put at risk, confidence in the sector is undermined and the cost of protecting clients and the public goes up.”

A combination of, among other things, a poor economic climate, budget cuts in the public sector and legislative changes have led to significant financial problems for numerous firms.

Antony Townsend said: “These pressures create not only economic challenges for firms, but also particular pressures upon those working in compliance – COLPs and COFAs – and upon the SRA, as a regulator. The challenge for us is how to use our limited resources to have the most impact in mitigating these problems.

“Targeting bad practices that put clients at risk and undermine public confidence is therefore an immediate priority for us.”

The SRA has brought together all its advice to firms on managing finances – including responsibilities outlined in the Handbook and a series of good and poor behaviours against which to measure practice – on its website. This resource can be accessed here:

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A copy of the speech is available here:

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