We are back following the Easter break with our regular dose of compliance news.
SRA’s ‘safe space’ for innovation and simplification of waiver system
Following a consultation last year, on the 12th April the SRA confirmed that it was proceeding with plans to ‘make it easier for law firms to develop new ideas, including a ‘safe space’ for innovation’. This ‘safe space’ will be similar to the FCA’s ‘sandbox’, where there the SRA will confirm that it will take no enforcement action despite a technical breach of its rules. It also proposes to change the waiver system, stating that ‘by simplifying this process and making the criteria clearer, we want to help firms understand what might be possible’ . Changes to the waiver system will include publishing details of waivers granted and checks to ensure that decisions are consistent.
Why it matters
‘Innovation’ has been a buzz word in the Cube (aka SRA’s headquarters) for some time, so this news is not a great surprise. But are the profession as keen? A quick scan of comments in legal press and repeated remarks include ‘profession dumbing down’ or ‘regulation lite’, there is certainly concern among the profession that all these changes from the SRA do nothing to improve the profession. Simplifying the waiver process is in our view to be welcomed, and it will be interesting to see the results of what waivers were granted.
SRA’s money laundering packages of resources
The SRA has published its latest anti-money laundering guidance and review findings which is a useful resource for practitioners. It has also published a sectoral risk assessment, the first of its kind, which is an invaluable resource in highlighting the main areas of risk for the sector. In addition. the SRA’s warning notice was also updated on the 2nd March and reinforces the obligations of all regulated persons to comply with the Money Laundering regulations and highlights the warning signs identified by the Financial Action Task Force (FATF).
Why it matters
The regulations have been in force for almost 10 months and there are no excuses for firms not to have ensured their policies and procedures are up to date. Both the guidance and the sectoral risk assessment should be essential reading for all practitioners, and certainly those working in management positions or working in high risk areas.
Claims Management Companies warned
The Claims Management Regulator has warned CMCs from using headlines that are sensationalising or misleading in ‘click-bait’ type advertising. It said that advertisement should contain information identifying the CMC At the outset before clicking the advert itself. This falls in line with other new restrictions brought in under the Conduct of Authorised Person Rules that came into force on the 1st April 2018. This includes a ban on fees being charged prior to any PPI or financial claims being concluded and CMCs precluded from chaging clients where ‘it is identified that the client does not have a relationship or relevant policy with the lender(s) for which a claim is submitted on their behalf’.
Why it matters
This is in line with a clamp down on the industry as a whole. In recent news is also two welsh directors of CMCs who have been disqualified following their CMCs making misleading sales calls and taking unauthorised payments.
PPI warning from the SRA
The SRA warned against firms taking on PPI claims that could be dealt with the clients themselves. Whilst the SRA deemed professional support for complex cases appropriate, the SRA’s chief executive has emphasised that fees must be appropriate. Historically, the SRA published a warning notice in August 2017 that it would consider any fees above 15% to be unreasonable. Despite this, the review published on the 7th April 2018 found that some firms were charging as high as 50%. It is thought likely that the current Financial Guidance and Claims Bill that is going through parliament will impose a 20% cap and will therefore put pay to such exorbitant fees.
Why it matters
This practice area is of course going to diminsh in any event.
- Protecting the users of legal services: balancing costs and access to legal services – ends on the 16 June 2018
New and updated SRA Warning Notices and Guidance
- The COLP and co-partner of MKM Solcitors Limied, Susan Marziano was fined £20,000 for aborgating any responsibility for financial management of the firm to her co-partner and COFA, who went on to make improper transfers of over £500,000.
- Nadir Suleman and Aadiel Salya were both struck off the roll by the SDT. This followed a conviction and a prison sentence for conspiracy to defraud by false representation.
- Office Manager Vikash Dawda agreed to a Section 43 order, a fine of £2000 and to be rebuked by the SRA. Mr Dawda misappropriated over £200,000 in client money and admitted to the firm that he had ‘borrowed’ money from the firm’s client account. All the money he had borrowed was repaid.
- Viney Jung, the sole director and COFA of the firm where Mr Dawda (above) worked, was rebuked and fined £1000 by the SRA. Ms Jung failed to report the matter to the SRA, the Firm’s Insurers or the Police.
- Solicitor Matthew Owen was rebuked and fined £1000.
- Jimoh Adun was struck off by the SDT for sunmitted 443 improper claims for costs and disbursements to the Legal Aid Agency totalling almost £1 million.
- Experienced Solicitor Robert Nigel Wiggans, who had been practicing for more than 30 years was struck off the roll by the SDT. He had misappropriated fore than £86,000 of client money in order to meet the Firm’s overheads.
- In an agreed outcome, Sarah Ann Hemmins was struck off the roll by the SDT. She admitted to the following:
- Failing to advise a client to seek independent legal advice prior to giving her £2000 in a will.
- Requested the £2000 cheque made payable to National Savings in order to conceal the true beneficiary from others in the firm.
- Accepted instructions on behalf of 2 clients where there was a conflict of interests
- Breached confidentiality in providing details to one of the conflicted clients about the others case.