SRA urged to seriously re-think flawed financial penalty regime proposals
The Law Society of England and Wales strongly urges the Solicitors Regulation Authority (SRA) to re-think the proposals set out in the financial penalties framework consultation.
The proposals are potentially unlawful, confusing, flawed and inconsistent with the principles* in the Legal Services Act and undermine the role of and authority of the Solicitors Disciplinary Tribunal (SDT) without rationale.
In response to the consultation on updating the financial penalty regime, the Law Society has serious concerns about the SRA’s attempt to have a single framework for all misconduct.
Not only does it conflate separate policy issues, but it risks confusion, as the SRA has unlimited fining powers for economic crime matters but limited fining powers for other types of misconduct for traditional firms and individuals.**
The proposed monitoring and safeguards processes, which are inadequate and appear to violate the principles of open justice and independent decision-making, are also of concern to the Law Society.
“The Law Society maintains its strong opposition to the SRA’s ambitions for any further extension to its fining powers and is strongly opposed to these unfair, disproportionate and potentially unlawful proposals,” said Law Society vice president Richard Atkinson.
“Should they go ahead, they would have serious repercussions for the legal profession and access to justice. Higher fines do not necessarily provide a credible deterrent or maintain public trust and the SRA has not provided empirical evidence to support this claim.”
On the new fining bands***, Richard Atkinson said: “Two new penalty bands should not be added to the existing framework.
“There should instead be a separate financial penalties’ framework for misconduct related to economic crime which could take a more nuanced approach and focus on factors specifically related to these matters.
“The SRA does not appear to fully appreciate the impact these proposals could have for smaller firms and individuals with lower incomes and protected characteristics – when it proposes to introduce minimum fine levels. Increased fines overall could lead to firm closures or bankruptcy for individual solicitors.
“The SDT has a much wider range of powers to sanction solicitors’ misconduct. The SRA, is in effect, proposing to cut the SDT out of the process by using only one limited type of sanction.”
The Law Society also believes that it is in the public interest for there to be open justice and for ordinary people to be able to attend disciplinary proceedings so they can watch the independent scrutiny and adjudication of cases and for decisions to be fully reported. These are all satisfied by the SDT’s existing role, but not the SRA’s proposals.
Richard Atkinson concluded: “We have grave concerns about the impact these proposals could have on the public and our members. Large fines imposed on legal aid firms could lead to firms closing down, which would have a detrimental impact on access to justice and vulnerable members of the public.
“Access to justice is often dependent on smaller entities in many areas of law. There is a strong risk that if the SRA’s proposals are implemented, it will lead to more legal aid deserts.
“We strongly recommend the solicitors’ regulator re-thinks its proposals to ensure any changes to its financial penalties’ framework are proportionate and transparent.
“It is also premature for the SRA to be seeking additional powers and investigative duties before the investigations into its handling of the Axiom Ince and SSB cases have been published by the Legal Services Board and any appropriate lessons learned.”
Notes to editors
*They are inconsistent with the principles set out in section 28(3) of the Legal Services Act 2007.
**The Economic Crime and Corporate Transparency Act 2023 empowers the SRA to impose unlimited fining powers in relation to economic crime-related misconduct for all regulated entities and individuals.
***The SRA’s proposed new fining bands are E and F. Band E would range from 6-10% of a firm’s annual domestic turnover and 113-145% of an individual’s income. Band F would range from 11% to upwards of 25% of a firm’s annual domestic turnover and upwards of 145% of an individual’s income.
Find out about our legal aid desert maps
Read the SRA’s consultation: financial penalties: further developing our framework.
Read the Law Society’s consultation response in full
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Press office contact: Naomi Jeffreys | 020 8049 3928