Welcome to this week’s edition of COLP Insider.
There’s a lot going on in the compliance world at the moment. It feels like the legal profession is edging into a new phase. A new SRA Chief Executive, renewed pressure on claimant litigation and funding models, proposals that would fundamentally change how solicitors handle client money, and a clear shift towards focusing on compliance officers and the structures they put in place.
Taken together, it feels like the regulatory mood is hardening. As ever, our aim is not to alarm, but to help you stay ahead of the issues that matter.
In this edition, we look at the SRA’s latest warning on “no win, no fee” marketing (and whether the regulator is really taking aim at the right thing), reflect on the risks of over-familiarity with long-standing clients, round up the latest disciplinary decisions, and tackle a practical question we’re being asked more often: can you record client meetings?
And if you’re a COFA (or work closely with one), bookings are now open for our COFA Masterclass. This is a full-day, practical in-person session focused on reconciliations, client account risk and signing with confidence. You can find details and book your place here.
Hope to see you at our next free CPD webinar on the SRA’s Compliance Officer Thematic Review.
Jon and the team.
Familiarity breeds complacency: what Peter Mandelson tells you about your law firm’s AML controls
Familiar faces feel safer. But that’s exactly where risk can creep in. Using the recent scrutiny around Peter Mandelson’s appointment as British ambassador to the US as a starting point, Sophie explores how over-familiarity can quietly erode AML discipline in law firms.
Conflicts of interest: the uncomfortable bit we all try to deal with quickly
Conflicts are one of those topics we all understand, right up until a tricky file lands on the desk. In a recent team discussion, we swapped notes on what really goes wrong in practice: own-interest risks that never get recorded, the knee-jerk rush to “consent and safeguards”, joint instructions that quietly store up trouble, and the subtle habit of starting from “we can act” and working backwards.
No win, no fee: what’s the SRA really worried about?
The SRA has published a new Warning Notice on “no win, no fee” marketing in high-volume consumer claims. In this post, we look at what the warning actually says, who it applies to, and why the regulator appears to have a particular unease with this ubiquitous phrase. We explore whether “no win, no fee” is genuinely misleading, or whether it remains useful shorthand that consumers understand, and ask whether pushing firms away from it risks distorting the market and discouraging more cautious, well-run firms from competing.
News and guidance
MOJ consultation deadline extended – there is still time to have your say in our survey
The Ministry of Justice has extended the deadline for responses to its consultation on proposals that could see 75% of interest earned on client accounts diverted to government. Responses must now be in by 9 March 2026. This is a fundamental issue for law firms, with potential implications for pricing models, access to justice and how firms fund their operations (see our post here). Anecdotally, there is already significant opposition from the profession and banks. We’re feeding into the debate and would welcome your real-world views. If you haven’t already, there is still time to share your thoughts via our short survey, which will inform our response.
SRA warning notice: “no win, no fee” in high-volume consumer claims
The SRA has published a new warning notice aimed at firms running high-volume consumer claims under CFAs/DBAs. The focus is on transparency and consumer harm: being clear about what clients will pay if they win (including deductions from damages), what they could still be exposed to if they lose (for example adverse costs/ATE issues), and avoiding funding/operating models that put the firm’s commercial interests ahead of the client’s. The SRA also flags the need for proper due diligence and oversight of lead generators/CMCs, including the accuracy of third-party advertising.
Motor finance commission claims: FCA/SRA joint statement
The FCA and SRA have issued a joint statement warning firms and CMCs about poor practice in motor finance commission claims, particularly “multiple representation” (clients being signed up with more than one representative for the same complaint) and unfair/excessive termination fees when clients try to unwind duplicate agreements. The regulators expect robust onboarding checks, genuinely informed client decisions before work starts, and crystal-clear information about cancellation/termination charges.
Mazur fallout: LSB interim report on conduct of litigation guidance
The Legal Services Board has published an interim report reviewing the advice and guidance being given across the sector on “conduct of litigation”, prompted by the continued debate following Mazur. Its interim view is that guidance has been variable in clarity and detail, references to “supervision” are sometimes too vague (especially on what can and cannot be done by unauthorised persons), and engagement between regulators on draft guidance has not always been consistent. The LSB says its final conclusions will take account of the Court of Appeal’s consideration of Mazur.
Separately, The Law Society has issued a detailed practice note on Mazur and the conduct of litigation. It reiterates that conduct of litigation is a reserved legal activity and cannot be carried out by unauthorised staff simply because they work in an authorised firm or are supervised. It also warns against “tick-box” oversight, stressing that responsibility is judged by substance not labels, and sets out practical steps for firms to review processes, training and file records, including clarity on which tasks can be delegated and which must remain with an authorised person.
SRA intervention: PM Law group
The SRA has intervened into 600-person PM Law Ltd and associated firms after being alerted to their unexpected closure. The intervention means the SRA has taken possession of client files and money, and has appointed an intervention agent to contact affected clients, prioritising urgent matters.
“Best interests of clients” – Stephen Mayson questions a core regulatory duty
Professor Stephen Mayson has published a new working paper and accompanying blog questioning whether the regulatory duty to act in the “best interests of clients” is as well-understood, or even as workable, as regulators often assume. He argues that the duty is frequently treated as self-evident, when in practice it is highly context-dependent, sometimes conflicting, and difficult to apply consistently across different types of legal work and business models. The paper suggests the concept risks being over-simplified in regulatory enforcement and guidance, and calls for a more realistic, transparent articulation of what the duty actually requires in practice. It’s a thought-provoking contribution at a time when the SRA is placing increasing weight on “best interests” language across supervision, warning notices and thematic reviews.
Compliance corner: Can we record client meetings?
Q: We’re increasingly holding client meetings by phone and video, and we’d like to record some of them. The intention is to improve accuracy, reduce later disputes about what was said, and support file management. We already refer to recording in our new retainer, but some long-standing clients won’t have signed the updated terms. Do we need fresh consent from all clients? Is recording allowed, and what safeguards should we have in place?
A: Yes, solicitors can record client meetings and calls, but it needs to sit properly within your data protection framework and your professional obligations.
From a data protection perspective, recordings of client meetings and calls will almost always be personal data, and in many cases special category data as well. That means the UK GDPR applies in full. You need a lawful basis for processing, transparency about what you’re doing, and proper controls around storage, access and retention.
In practice, most firms rely on either consent, performance of a contract (the retainer) or legitimate interests (for example, accuracy of advice, risk management, and evidential clarity).
All three lawful bases can work, but they have different consequences. If you rely on consent, clients must be able to withdraw it at any time. If you rely on performance of a contract or legitimate interests, you still need to tell clients clearly what you’re doing and why, and be able to justify that recording is proportionate and necessary.
Whichever route you take, your Privacy Notice should explicitly refer to recording meetings and calls, explain the purpose, how long recordings are kept, who has access to them, and what clients’ rights are in relation to those recordings. A paragraph buried only in a retainer is rarely enough on its own.
You should also think carefully about data security. Recordings increase the sensitivity and volume of personal data held, so appropriate technical and organisational measures need to be in place to mitigate the risk of unauthorised access, loss or cyber-attack. That includes secure storage, restricted access on a need-to-know basis, clear retention periods, and controls around downloading or sharing recordings.
From a conduct perspective, there’s nothing inherently improper about recording client meetings. In fact, doing so to ensure clarity and accuracy can support your duties to act in the client’s best interests and to provide a proper standard of service. The risk arises if recording is done covertly, or in a way that undermines trust or client autonomy.
That’s why best practice is to:
- Tell clients at the outset of each recorded meeting or call that it is being recorded
- Give them a genuine opportunity to object or ask for the recording to be stopped
- Make clear that refusal will not prejudice the service they receive
Even if you have written consent on file, reminding clients at the start of a call avoids misunderstanding and reinforces transparency.
As for historic clients, it is not usually necessary to write to everyone demanding a fresh signature purely because you want to record meetings. A more proportionate approach is to update your Privacy Notice, notify clients of the update, and obtain consent or confirm acceptance at the point you actually propose to record.
Finally, remember that recordings become part of the client file. They may be disclosable in complaints, subject access requests, negligence claims, or regulatory investigations.
This is not legal advice. If you have a question you would like us to answer in this section, feel free to send it to info@jonathonbray.com
Free CPD
Save the date: Free CPD webinar – SRA Compliance Officer Thematic Review
Wednesday 25 February | 12:00–1:00pm | Live on Zoom – Invitations and registration link coming next week
In December, the SRA published its long-awaited thematic review into the effectiveness of COLPs and COFAs. It’s a quietly important document, not just about who holds the role, but how it works in practice.
In this free, one-hour live session, our team will unpack what the SRA was really testing for, what it found, and what it means for compliance officers in real firms..
We’ll cover:
- The headline findings from the SRA’s review
- What makes an effective COLP/COFA
- Common issues we see
There will be polls, scenarios, and live Q&A throughout. The session counts towards continuing competence and is suitable for COLPs, COFAs, partners, directors and anyone involved in firm-wide risk and governance.
Save the date: 25 February at 12pm.
Recording now available: Signing with confidence – mastering client account reconciliations for COFAs
We kicked off 2026 with our first webinar specifically for COFAs, focusing on one of the most critical controls in the SRA Accounts Rules.
Are you signing off your client account reconciliations with total confidence? It’s a COFA’s job to sign off on reconciliations, but knowing what to look for is where the challenge lies.
Sean and Liz (both ex-forensic investigators) covered the mechanics of a perfect reconciliation, common “horrors” and red flags to watch out for.
This was a not-to-be-missed session. So if you missed the session, here is your second chance.
Watch the recording here (passcode Passcode: c13kYgi%) – link expires in a few days.
Prefer in-person? We are running a COFA Masterclass on 25th March in London. Click here to book.
Alongside the training, we’re offering client account health-checks to stress-test your systems before the SRA (or your reporting accountant) does, and targeted projects to clear stubborn residual balances in a way that keeps both the regulator and clients happy. If your client account keeps you awake at night – or you’d like to make sure it doesn’t – we’d be very happy to talk.
Disciplinary Watch
A familiar mix of recent cases: significant client account misuse in probate work; a steady stream of AML fines for weak or missing risk assessments (again, with no suggestion of actual money laundering); and further dishonesty cases where small decisions quickly turned into career-ending outcomes.
Client money and dishonesty
A probate solicitor was struck off after the SDT found he had caused or allowed around £1.2m to be paid from client account without proper client instructions, creating a substantial shortage. Some of this was used to fund his own tax bill. The Tribunal also found he had applied an electronic signature to a letter to HMRC without the individual’s knowledge or consent. Dishonesty was proved and strike off followed.
The SDT also struck off a solicitor who acted dishonestly in relation to the sale of a property he jointly owned. He progressed the sale without the co-owner’s authority, arranged for the proceeds to be paid into his own account, and failed to account to the co-owner, while sending misleading messages to conceal what had happened.
In another dishonesty case, a senior family solicitor was struck off after admitting she had misled an unrepresented party into believing financial remedy proceedings had already been issued when they had not, and then instructed a colleague to continue the deception. The Tribunal treated the misconduct as serious, particularly given the pressure placed on an unrepresented party.
An in-house solicitor was also struck off after admitting dishonesty for repeatedly providing false and misleading information about his qualifications and experience in CVs and job applications. Multiple inaccurate versions were circulated to recruiters and employers over a period of months, with the Tribunal finding the conduct serious and deliberate. As we have said before, don’t be tempted to embellish your accomplishments!
AML systems and controls – fines keep coming
The SRA continues to issue fines where core AML building blocks are missing or inadequately implemented:
- Castle Sanderson Limited – fined £10,462 for deficiencies in AML policies, controls and procedures.
- Caisson Turner Legal Services – £1,596 fine for failures around client risk assessments.
- Penmans Law Limited – fined £12,128 for AML policy and control failures.
- Mackarness & Lunt – £11,676 fine for failures in firm-wide risk assessment and PCPs.
- HMG Law LLP – £25,000 fine for weaknesses in firm-wide risk assessment and PCPs.
- James Legal Limited – £8,503 fine for PCP failures.
As ever, these cases are not about money laundering having occurred, but about firms being unable to evidence compliant systems and risk-based decision-making on files.
Banking facility and client account misuse
In a linked pair of decisions arising from the same facts, the SRA fined both a firm (£68,000) and a consultant solicitor personally (£9,941) after finding the firm’s client account had been used as a banking facility. Very substantial sums (over C$23m) passed through client account without a proper connection to the legal services being provided. The cases underline, again, how unforgiving the regulator remains where client account is used for escrow-style or transactional purposes without clear justification.
Independent AML audits
What we do – contact us for further information about our services
- Outsourced COLP and COFA support
- COLP and COFA coaching
- Compliance audits
- NEW: Client account health checks
- NEW: Residual balance projects
- New firm and ABS applications
- Independent AML audits (Regulation 21)
- Training (online, remote, on demand)
- AML and GDPR workshops
- PII reviews
- Remote file reviews
- TPMAs
- Escrow accounts
- AML and sanctions searches
Older posts
Call to arms: Interest on client account – the controversial proposals from the Ministry of Justice
We are preparing a response to the Ministry of Justice proposals that could see a significant proportion of interest earned on client account diverted to government. Our response will be informed by your feedback via a short survey.
In this post, Sophie sets out the proposals and asks for your real-world concerns, observations and any alternative suggestions you may have. This is a fundamental issue: it goes directly to our relationship with clients, access to justice, and the cost of buying and delivering legal services.
If you do not have time to submit a full consultation response yourself, you can use our feedback form to share a few quick thoughts.
Signing with confidence: mastering client account reconciliations for COFAs (webinar write-up)
This session was all about getting confident with client account reconciliations: the three-way check, the paperwork trail, and the difference between a timing issue and a real shortfall. If you’re a COFA (or work closely with one), it’s a great primer for the sort of practical detail we’ll be covering in our upcoming COFA Masterclass.
Everyone knows you can’t do that…or do they?
We’ve all had those moments where a “quick fix” looks attractive, before realising everyone knows you can’t do that. But disciplinary decisions keep showing that plenty of people don’t know – or they feel the pressure and convince themselves the quick fix harmless. This short piece by Sam is about the danger of unspoken red lines (signatures, backdated notes, “technically true” but misleading documents) and why firms need to spell out the non-negotiables before someone gets themself in trouble.
