The COLP COFA conference always gives a useful into what the regulator is worried about, where supervision is heading, and how firms should respond. Here are the headlines we took away.
1) The SRA’s mea culpa on SSB set the tone
The day opened with clear acknowledgement that mistakes were made and that lessons will be implemented. The emphasis was on strengthening supervision, more “intrusive” regulation and acting earlier where signals are missed. It was less defensive than many expected – although any other approach would surely have been met with open hostility.
2) …but it wasn’t a resignation matter
Paul Philip (outgoing CEO) and Anna Bradley (Chair of the Board) were explicit that they did not consider SSB to be a resignation issue. The argument was for continuity to see through the reforms rather than a change of personnel. You may agree or disagree (one brave soul shouted “Rubbish!” from the galleries), but the message was one of stability with accountability.
3) “More intrusion” is coming
The SRA has notable blind-spots. It has recognised that it does not have enough data about the regulated firms – what they do, what risks they present – and has to rely on reactive information collection exercises. SRA leaders now want to be more proactive.
Expect earlier regulatory touch points for models that have either historically produced harm, or are for other reasons on the SRA’s radar. High-volume consumer claims and AML are clearly top of the agenda at the moment. The direction of travel is proactive engagement, not simply post-event enforcement.
4) Authorisation backlogs
The Authorisation team told us that the department is sticking to its published service levels (90 days for new firm approvals and 30 days for role-holder approvals). That will sound optimistic to many given real-world experience, but it remains the benchmark against which they want to be judged.
The practical takeaway is to submit complete, well-drafted application packs and maintain a clear timeline of exchanges.
5) Government news stole the show
Mid-conference, the government announced plans to strip the SRA of its AML supervisory role and move professional-service supervision to the FCA (legislation and transition to follow). Whatever your view of this development, it overshadowed much of the day. The implications are potentially significant: we will effectively have a second regulator.
It’s unlikely that the burden on law firms will reduce, but the style of regulatory supervision and data expectations may well shift. It’s too soon to say whether this is positive or negative for the profession.
6) AML focus continues (for now)
We heard that a ready-baked thematic review on source of funds was due to land on the day. Clearly, this was meant to be a big announcement. But since the government’s FCA bombshell, it has gone quiet, suggesting the regulator was caught off guard and is recalibrating messaging.
The work will surely not be wasted; expect it to surface soon, possibly with added context for the FCA transition.
7) High-volume claims are still in the crosshairs
The SRA clearly has an eye on motor finance and similar high-volume consumer claims. The areas of concern are familiar: compliant marketing, price and service transparency, acting in clients’ best interests, and effective supervision.
There was concerted pushback from claimant firms represented on the day. They feel demonised as a sector of the profession, and they question the regulator’s understanding of the economics of bulk litigation, and the role group actions play in access to justice and holding multinational companies to account.
8) Client protection review will resurface
Any controversial decisions about protecting client money has most definitely not been kicked into the long grass, according to the top brass. Once the current pressures on regulatory attention have passed, we can expect the SRA to present proposals for the future of handling client money, interest on client money, and COLP & COFA roles.
A consultation on reporting accountants is imminent.
9) Mazur: everything yet nothing has changed
The message was that Mazur did not change the law, but it was acknowledged that the High Court decision has sent shock waves through the profession. Only authorised individuals conduct litigation; non-authorised colleagues may support, but not cross the line into taking overall responsibility for the case.
Firms need to define the tipping points in practical terms (signatures, applications, correspondence) – but according to the SRA, “it should be obvious” what conducting litigation actually means.
10) No steer for self-reporting on pre-Mazur activity
There was no indication that the SRA expects a raft of self-reports for historic, inadvertent conduct-of-litigation breaches – despite the fact that they are potentially offences under the Legal Services Act. Solicitors have a duty to promptly report “serious” breaches to the regulator – failure to do so is misconduct in its own right.
So it was hoped that the regulator would use the conference as an opportunity to give some clear guidance on reporting, but for the time being we will have to read between the lines: pre-Mazur breaches are probably not immediately reportable – but if in doubt speak to Professional Ethics.
11) AI will be transformative – one way or another
Rather ominously, the SRA thinks “the writing is on the wall” for lawyers. We all know how powerful artificial intelligence has become and how quickly it has been adopted by the public. With the potential for considerable legal cost savings, the regulator anticipates that it will be asked to regulate many more AI-first business models. For now, these will all have to be closely supervised by lawyers-in-the-loop.
But the profession needs to ask itself – what will the practice of law look like in five or ten years time? What will ChatGPT 10 be capable of doing, and what is our role as lawyers?
