It’s time for your fortnightly slice of compliance pie. Dig in!
You only have 8 weeks to sort out your websites to comply with the new Transparency Rules. Knowing how difficult it can be to get web designers to do anything, it is probably best to start making changes now (or learn how to do it yourself).
Whilst we were braced for the price transparency bit, the very prescriptive requirements set out in the SRA’s 2 October guidance took us aback. They are basically setting out what information you need to provide on your ‘About Us’ page. A step too far?
Don’t forget that the new insurance distribution rules also came into effect this week. Often overlooked by firms who assume they either aren’t caught (hint: most are), or that the rules stop at having to register with the FCA (hint: there’s more to it than that).
After a relatively quiet time since GDPR, COLPs have to jump back into action!
Have a lovely weekend,
Jon and the team
New Transparency Rules – it’s not just pricing!
The new Transparency Rules are due to come into force on 1st December 2018 and the SRA has now published its long-awaited guidance for firms.
To recap, the services that fall into scope of the new rules are:
- individual clients: residential conveyancing, probate, immigration (except asylum), road traffic offences, and employment tribunal claims (unfair/wrongful dismissal)
- business clients: employment tribunal claims (unfair/wrongful dismissal), debt recovery (up to £100,000), and licensing applications for business premises.
Along with detailed pricing information on websites, firms will be required to publish the following:
- What services are included and are not included in the price – important in fixed fee cases so there are no hidden extras
- Whether you charge differently depending upon the manner in which services are provided (e.g. face to face vs online)
- Full details of the experience and qualifications of members of staff who will carry out the work eg. years PQE, estimated number or examples of cases they have dealt with; percentage of time spent in a given area and complexity or type of issues they usually deal with
- Experience and qualifications of the supervisors
- Typical timescales and key stages in the matter
The lack of a website does not excuse firms from ‘publicising’ this data. The information must be readily available. Those who fail to comply will risk enforcement action.
Why it matters
We have come full circle from principles based regulation. These are mandatory rules, not fluffy Outcomes. And since it is a big part of the SRA’s drive to address the ‘lack of access to legal services’ – a policy direction driven by those higher up the regulatory food chain – then we can expect the SRA to be serious about enforcing it.
And as you can see, it is not as simple as adding some hourly rates to a regulatory page on your website. Pricing and service information is meant to sit front-and-centre.
Unless you know how to update your website, the December deadline is going to be tight for many. The Law Society is urging the SRA for a period of grace to allow practitioners to make the necessary changes.
We will be publishing our own guidance soon.
We can review your publicity wording for a fixed fee. Contact us for more information.
Insurance Distribution Directive goes live
You may recall our recent blog forewarning of the imminent implementation of the Insurance Distribution Directive which has now come into force. The SRA has published its amendments to the SRA Financial Services (Conduct of Business) Rules 2001 to coincide with the date it came into force on 1st October.
This will directly impact upon those firms undertaking insurance intermediary activities. Conveyancing and PI firms will almost certainly be caught (among others).
Firms must clearly provide clarity as to their status when not regulated by the FCA and must do so in a written statement which may be included in the initial client are letter or terms of business.
There are more stringent requirements in relation to the professional and organisational knowledge of the insurance product and the demands and needs statement must focus upon the bespoke needs of the client.
Why it matters
More prescriptive rules alert! Admittedly, this comes from a European dictat, but still, any illusion of flexibility in deciding what compliance looks like is well and truly over.
This rule change is not particularly onerous, but it is an easy one for the SRA to pick on. Might we see the next round of ‘thematic reviews’ (read, random visits) to focus on insurance distribution activities?
Our experience is that the previous insurance mediation rules were poorly understood, and often ignored.
COLPs, you should be jumping all over this to make sure your procedures are up to scratch.
PII survey reveals problem areas
The Law Society has published its annual insurance survey which unveils some concerning trends.
It has revealed that a third of firms (32%) reported being the victims of cyber-scammers in the last year, an increase of a quarter on the 2016-2017 figures. Whilst only 3% of attacks resulted in any financial loss, 6% directly resulted in a data breach.
This is consistent with a separate finding by the National Security Centre that 60% of law firms had an “information security incident” in the last year.
It is also concerning that many firms (47%) are not aware that the Solicitors Indemnity Fund (SIF) is due to close in 2020. This is significant because it has been responsible for providing post-six-year run off cover for the past 18 years.
SIF protects retiring solicitors from being sued for claims that fall outside the mandatory run-off period.
Interestingly, the report also suggests that cheaper premiums may be available if firms opt for 24-month policies rather the usual 12-month policy.
Why it matters
Insurers place a considerable weight upon the measures that firms adopt and systems they have in place to prevent cyber attacks. Cyber crime is not going away any time soon, and so we can expect to see insurance becoming harder to purchase for those with poor digital practices.
The removal of SIF places yet another barrier in front of retiring from the profession. It makes having a successor practice almost a necessity, which could drive down the value of small practices even further. Good news if you are looking to buy a firm, on the other hand.
New and updated Law Society Practice Notes
- Fiduciary roles and retirement or departure from practice by a private client practitioner – useful tool to aid with succession planning.
- Setting up a practice – regulatory requirements – a helpful toolkit for those starting out.
- How to respond to a financial crime investigation – useful advice in respect of how to manage competing statutory and confidentiality obligations.
- Neil Andrew Aiston has been struck off and fined £63,993. He was found to have acted dishonestly when dealing with a vulnerable client. He was found to have encouraged the vulnerable client to make an unsecured loan of £175,000 to another client but in fact the money was used to bolster the firm’s client account.
- Piers Matthew Beach was fined £7,500 and ordered to pay £20,000 but not found to have acted dishonestly in respect of gifts