The Solicitors Regulation Authority has paused its plan to bar owner-managers with unilateral control of their firms from acting as compliance officers. The announcement came on 1 October 2026, less than a fortnight before the Law Society's annual general meeting on 14 October, where a newly formed alliance of small and boutique firms intends to call for a vote of no confidence in the regulator.
For many firms this is welcome news. On the SRA's own estimate the rule change, due to be phased in from January 2027, would have required around 1,660 firms to find a new COLP or COFA, or both, and a further 431 sole owner-managers to hand the COFA role to someone else. The pause removes the immediate deadline. It does not remove the underlying policy, and the SRA has been clear that it still intends to act.
What the SRA proposed
The proposal grew out of the SRA's client money consultation following the collapse of Axiom Ince and SSB Law. In December 2025 the regulator consulted on measures to put checks and balances on those with significant power within a firm. One was a new rule 8.4 in the SRA Authorisation of Firms Rules. A sole practitioner, or any firm with a single owner-manager, was unaffected below both thresholds, but above £2 million in client money the owner would have had to hand the COFA role to an employee, and above £600,000 turnover would have lost the COLP role too, to an employed lawyer. A firm with two or more managers or owners was caught only above either threshold, and even then only a manager or owner able to decide significant management matters unilaterally was barred from being COLP or COFA, so partners who shared decision-making could have carried on.
The SRA confirmed the policy in June 2026, having raised the client money threshold from £500,000 to £2 million, and the Legal Services Board approved the rules in August.
Opposition built quickly. The Law Society had described the proposals in February as "complex and impractical" and warned that they would hit small and medium-sized firms unfairly, with the costs passed on to clients. In September it called for a pause and for the thresholds to give way to a "targeted risk model" built on data the SRA already holds. Then came the SME & Boutique Law Firm Alliance, founded by Jade Gani of Circe Law, whose open letters attracted more than 160 signatures from 125 firms. The Alliance argued that a turnover of £600,000 is easily reached by a small conveyancing or private client practice, and that the SRA could offer no evidence for the figure beyond having used it elsewhere. Stephen Nelson, the SRA's former head of legal, noted that the regulator's own blog used "unilateral" in four different ways.
Why the SRA has paused
Aileen Armstrong, the SRA's executive director for policy and strategy, said the regulator understood the concerns raised, "particularly by smaller firms". She went on, "We are pausing to take stock. Over the coming weeks, we will actively consult with stakeholders on potential options we are developing with a view to making necessary changes to our approach and achieving the objective in a proportionate way."
The SRA has not abandoned the objective. It still wants checks and balances on individuals who control a firm, a direction it says the Legal Services Board has set. What it has conceded is that the method, a blunt threshold catching nearly a fifth of firms, risks unintended consequences. The regulator is under new leadership, with Sarah Rapson as chief executive since late 2025, and is still recovering from criticism over Axiom Ince and the £30 million Compensation Fund payout after PM Law collapsed in February. Law Society president Mark Evans welcomed a willingness "to listen and act when they have got it wrong".
What this means for firms that were worried
If your firm sits above either threshold and your COLP or COFA is an owner with real control, you can stop the clock on January 2027. No new date has been given, and any revised rule will almost certainly need fresh Legal Services Board approval, which makes a January start very unlikely. You do not need to recruit, outsource or redesignate anyone in a hurry.
Three cautions apply. First, the current rules remain in force. Your compliance officers must still be a manager or employee, approved by the SRA and senior enough to do the job. Second, the pause covers only the compliance officer rule. Assume the rest of the client money package, including annual submission of accountants' reports from April 2027, remains on track unless the SRA says otherwise. Third, some version of this reform is likely to return. The Law Society's alternative is a risk-based model using reconciliation data, regulatory history and firm characteristics. Under that approach the firms most exposed would be those with weak financial controls, not those that cross a turnover line.
So if you had started to strengthen your governance, keep going. Dual authorisation of client account payments, independent review of the five-weekly reconciliations and a clear record of who decides what are good practice whatever the final rule says. If you have already signed up an outsourced COFA, check the notice terms now. And when the SRA opens its consultation, respond.
The wider significance of a vote of no confidence
The Alliance has called the pause "an important first step" but says its call for a vote of no confidence "concerns wider issues than just COLP/COFA proposals alone" and will not be withdrawn. Ms Gani has ten minutes to address the AGM and intends to ask the president to put the motion to members.
A vote of that kind has no legal force. The Law Society cannot direct the SRA, whose regulatory independence is protected by the Legal Services Act 2007 and the Legal Services Board's internal governance rules. But to dismiss the vote as symbolic misses the point. A regulator's authority rests on the consent of the profession and the confidence of the oversight regulator above it. A formal vote by members of the representative body puts both under strain. It invites the Legal Services Board to look again at the SRA's performance, attracts ministers and the press, and makes every future consultation harder because the regulator must rebuild its credibility before its arguments are heard.
There is a precedent. In 2024 members of CILEX declared no confidence in their institute's board over plans to move regulation of legal executives to the SRA, and the row ran on for months. The SRA's own research, published in June, shows that 34 per cent of legal professionals already view it negatively, up eight points in a year. The fact that the threat alone produced a pause within days tells you how exposed the regulator feels.
What you should do now
Carry on as you are, but do not relax. Keep your existing COLP and COFA in post and make sure their approvals and records are up to date. Review your financial controls against the alternatives the Law Society and the Alliance have proposed, since those point to what comes next. Watch for the SRA's consultation and respond to it. We will update the InfoHub factsheets and guidance on compliance officers as soon as the SRA publishes its revised approach.
