Plans have been announced by the Legal Services Board (LSB) to carry out a review of the enforcement and investigative tools that are available to the legal services regulators such as the Solicitors Regulation Authority (SRA).
In the light of the LSB’s long-held view that existing penalties may be insufficient to deter wilful and serious misconduct, the review could lead to recommendations for increasing financial penalties available to regulators, as well as enabling regulators to proactively gather information and share intelligence to help them detect and address misconduct.
The LSB already has work underway to review regulators’ disciplinary and enforcement processes, following weaknesses identified through its annual regulatory performance assessments. The LSB will assess the progress made by regulators in addressing these weaknesses as it considers the case for strengthening the enforcement tools available to them.
Under section 69 of the Legal Services Act, the LSB has the power to recommend to the Lord Chancellor changes to the functions of legal services regulators, including in relation to the level of financial penalty that can be applied when misconduct has been identified and established. The LSB’s review is being carried out with a view to framing, subject to statutory process and consultation, an appropriate recommendation.
Alan Kershaw, Chair of the Legal Services Board, said:
‘The public rightly expects that lawyers in England and Wales will uphold the highest professional standards and ethical conduct.
‘For some time, we have been concerned that a lack of effective fining powers among some regulators, particularly the Solicitors Regulation Authority, may hamper their ability to tackle wilful and serious misconduct. We are anxious to ensure that regulators have the most effective tools available to identify and deal with such misconduct.
‘At the same time, the LSB needs to have confidence that first class enforcement powers are accompanied by first class enforcement processes that are fair, transparent and timely.
‘We will address these issues to help build public trust and confidence in legal services – an objective we hope everyone will get behind.’
The Law Society have responded to the proposal by stating that they strongly oppose any proposals to further increase the current financial penalties available to the SRA. They said that “there is no evidence that the SRA’s current fining powers are insufficient. The SRA does not exist on its own in the regulatory process. It sits alongside the SDT, which already has draconian powers to sanction any wrongdoing in the solicitors’ profession. These include not only fining powers but also the ability to remove a solicitor from the profession altogether. The SDT remains the appropriate forum for serious cases of alleged misconduct. It is independent from the regulator and has clearly defined processes. … Further, extending the SRA’s powers risks undermining the SDT’s role and authority, and potentially reducing the sanctions imposed on bad conduct”.
Given the extent to which the SRA are clamping down on firms for even the slightest infractions of the rules, and the difficulties that an increasing number of firms are facing in being able to keep up with the constant barrage of regulation, is this something that we really want?