Welcome back — I hope you managed a proper break over the summer. The regulators didn’t! This edition tackles the SRA’s high-volume claims thematic review (and that “exceptional” mandatory declaration), an unusual joint SRA/FCA warning on motor finance, Treasury’s proposed tweaks to the MLRs, the SRA’s refreshed sectoral AML risk assessment, a new Law Society note on gifts in wills, and the “failure to prevent fraud” offence going live.
Our Disciplinary Watch is heavy on integrity, conflicts and basic systems — these real cases are always worth a team discussion.
There are a couple of new blogs too (the implication of regulation-by-declarations, apologies that actually resolve complaints), plus Sophie’s Michelin-style framework for matter risk assessments.
If you’d like to talk through what any of this means for your firm, you know where we are. Not on a beach, unfortunately….[sigh!]
Jon and the team.
SRA regulation through declaration: A necessary nudge or a nasty trap?
The SRA is taking the “exceptional step” of forcing claims firms to certify compliance. In this post, we examine what that really means, the pitfalls, and what the use of this regulatory tool means for the rest of the profession.
An apology is the best way to handle a complaint
An apology done right can save time, money, and reputation. This piece by Sophie Cisler shows the wording, timing and tone that work.
The “Michelin Guide” to matter risk assessments: A fine-dining framework for spotting risk in every course of a matter
From amuse-bouche to dessert: Sophie Cisler’s “Michelin Guide” turns matter risk assessments into a fine-dining framework you can actually use at every stage.
News and Guidance
High-volume claims: SRA takes exceptional step – The SRA has published the results of its thematic review into high-volume consumer claims. The findings include weak client care, poor funding arrangements, thin oversight of introducers, and questionable ATE insurance practices.
Nine of the 25 firms visited are now under investigation, and there are 95 open investigations across 76 firms.
In a significant move, the SRA is writing to firms in this sector requiring a declaration that they are compliant with professional rules. If not, they are expected to put things right immediately. The regulator describes this as an “exceptional step” – and you can be sure that false or careless declarations will be treated as a serious disciplinary issue.
What you should be doing now
- Map how clients come to you, how cases are funded and insured, and where introducers/referrers are involved.
- Keep an auditable register of introducers, including FCA/ICO status and sample marketing materials.
- Sense-check your financial due diligence on funders – don’t stop at Companies House.
- Ensure your ATE permissions and disclosures are watertight.
- Make onboarding checks non-optional in your workflows (ID, sanctions, conflicts).
- Record explicit client consent to settlement decisions.
- Treat the declaration as a board-level exercise, supported by hard evidence.
Joint SRA/FCA warning to firms and CMCs – At the end of July the SRA and FCA issued a joint warning about poor practices in car finance commission claims. The main themes: firms and CMCs must tell consumers about any existing (or realistically imminent) free FCA redress scheme before they sign up; clients must be clearly informed of termination rights and any exit fees; and any fees charged must be fair and reflect work actually done.
The regulators highlighted concerns over speculative marketing figures, failure to signpost free alternatives, and misleading statements about prospects and claim value. They note consumers risk giving up a significant share of any redress in fees, that the FCA has forced hundreds of promotions to be changed or withdrawn, and that the SRA already has a substantial number of live investigations into firms active in this area.
Shortly after these warnings, the UK Supreme Court delivered a landmark judgment in the motor finance commission cases. It ruled that car dealers did not owe a fiduciary duty to customers, overturning two of three appeals. Still, one case was upheld: the Court found an “unfair relationship” under the Consumer Credit Act, making commission repayable in specific circumstances.
Following the ruling, the FCA announced plans to consult on an industry-wide redress scheme, potentially covering commissions that were not properly disclosed. A formal consultation will be published by early October 2025.
What you should do now
- Update engagement materials to highlight (a) the limited scope of the Supreme Court judgment (not all claims will qualify), and (b) the potential for a free FCA redress process.
- Review all marketing and introducer scripts to remove speculative figures and misleading claims; ensure disclosures of free alternatives are prominent.
- Examine termination and exit terms for fairness and clarity. Ensure fee structures genuinely reflect work done.
- Audit existing client files to confirm onboarding communications included reference to free redress routes and the implications of the Supreme Court judgment.
- Record board-level oversight: minutes should show assessment of the Supreme Court ruling, client communications strategy, and redress consultation preparedness.
- Monitor the FCA consultation (expected October 2025) and map how your firm will engage with it.
SRA updates sectoral AML risk assessment – The SRA publishes its Sectoral Risk Assessment to fulfil its duties under the Money Laundering Regulations 2017, offering a tailored view of vulnerabilities specific to the legal sector. This is intended to be read alongside the Government’s National Risk Assessment, which maps broader, cross-sector AML/CTF threats. Firms must consider both when developing or updating their firm-wide risk assessments.
New and emerging risks identified
- Capital flight from high-risk jurisdictions: An increased threat comes from rapid movement of funds out of sanctioned or destabilised regions.
- Client account vulnerabilities: Misuse of client accounts e.g. treating them like bank accounts or holding funds unnecessarily long, which continues to be a red flag.
- Poor CDD scrutiny: Weak source-of-funds checks and inconsistent verification of client ID remain frequent failures.
- New business models: Consultant network models with remote, semi-independent lawyers risk inconsistent AML oversight.
- Technology threats: Emerging tech—such as deepfakes in client onboarding and cyberattacks—requires careful risk and mitigation assessment.
- Economic pressures: In a tight economy, firms are reminded not to let compliance—and AML in particular—be a cost-cutting casualty.
What the SRA’s supervision work reveals
From field inspections and supervision activity, the SRA has consistently flagged the following as persistent control failings:
- Failure to conduct proper source-of-funds checks.
- Inadequate implementation of independent AML audits under Regulation 21.
- Weaknesses in staff screening.
- Gaps in matter level risk assessments.
What firms must do now (especially MLROs, COLPs, COFAs)
- Update your FWRA – Incorporate the SRA’s latest sectoral assessment so your FWRA reflects both new and continuing risks.
- Revise client and matter-level risk processes – Use the SRA’s risk template as a baseline, but tailor it to your firm’s context. Ensure each risk score is backed by a narrative, and that risk assessments evolve as matters progress.
- Strengthen staff training and oversight – Make sure remote or semi-independent team members are fully trained in your AML policies and that compliance standards are consistently applied across the firm.
- Audit your compliance controls – Especially focus on independent AML audits (where applicable), staff screening, source-of-funds checks, and risk assessment consistency. Make sure you act on audit findings promptly.
- Prepare for heightened supervisory scrutiny – Expect the SRA to ask for your updated FWRA, risk templates, training logs, audit records, and matter files. Keep those records accessible and up to date.
Law Society guidance: wills leaving gifts to solicitors – The Law Society has published a new practice note on preparing wills where the client intends to leave a gift to you, your family, or colleagues.
The note provides a clear framework to manage conflicts and demonstrate compliance with SRA Principles:
Be alert to conflicts of interest and record how these are managed.
Consider whether independent advice or another firm should draft the will.
Safeguard against undue influence and ensure the client’s decision is fully informed and voluntary.
Keep detailed records of discussions, advice given, and the decision to act (or not).
Treasury consults on updates to Money Laundering Regulations – HM Treasury has released draft amendments to the Money Laundering Regulations, with a technical consultation open until 30 September 2025. The proposals are aimed at tightening and clarifying certain areas rather than wholesale reform.
Changes include new clarity on customer due diligence thresholds for letting agents and art market participants, additional obligations for firms operating pooled client accounts to understand their purpose and assess underlying risks, and a temporary relaxation of ID verification requirements for customers affected by bank insolvencies.
Enhanced Due Diligence will be more targeted, applying only to unusually large or complex transactions and to jurisdictions on the FATF “Call for Action” list, while the scope of the Trust Registration Service will be widened to capture some previously exempt trusts. The final regulations are expected to be laid before Parliament in early 2026.
Failure to prevent fraud offence now in force – From 1 September 2025, the government’s new corporate criminal offence of failure to prevent fraud takes effect under the Economic Crime and Corporate Transparency Act 2023. It applies to large organisations (meeting at least two of: more than 250 employees, over £36m turnover, or over £18m in total assets) and makes them liable if an employee, agent, subsidiary or other “associated person” commits a fraud intending to benefit the organisation. The defence is having reasonable fraud-prevention procedures in place. The move is part of wider anti-fraud measures and is backed by the SFO and CPS, who signal readiness to prosecute.
Compliance corner: Conflict when acting for a company and senior employee
Q: In a M&A file, we’re acting on for the company on the sell side. As part of completion, a senior employee-manager is getting a new option package (and some “good/bad leaver” protections). The board has asked us to “help the manager through their docs” to keep things moving. They say it’s standard and everyone wants the deal done. Can my team advise the company on the SPA and also advise the manager on their option and service terms?
A: This sounds like a classic client conflict trap. Your duty to act in each client’s best interests pulls in different directions: the company wants the tightest warranties, restrictive covenants and leaver regime it can get; the manager wants exactly the opposite on vesting, exercise, tax, leaver definitions, post-termination restraints and warranty exposure.
Under the SRA rules you must not act where there is a conflict or a significant risk of one, subject only to narrow exceptions (substantially common interest / competing for the same objective) and strict conditions (informed consent in writing, appropriate confidentiality safeguards, and it being reasonable to act for both). In most M&A/incentive scenarios, there will be material negotiation and unequal bargaining power, making the exception hard to justify.
Even if you tried to rely on “substantially common interest” (i.e. “we all want completion”), the interests aren’t substantially common on the terms of the manager’s package. If you foresee substantive negotiations, the SRA says don’t act for both unless the exception safely applies, which usually it won’t in this context.
Information barriers don’t cure a client conflict; they are about protecting confidentiality and, even then, require robust structural separation where used as a safeguard under the Code’s conditions.
There’s also confidentiality vs disclosure to navigate. Acting for both often creates situations where material information received from one client can’t be shared with the other; if you cannot disclose information that is material to the matter, you may have to cease acting for one or both clients.
Practical points:
- Identify the client(s) clearly at the outset and record authority to instruct.
- Advise the company only. Tell the manager to obtain independent legal advice on their options, leaver terms, covenants and any director service arrangements. Keep a clean separation of files and personnel.
- If (exceptionally) you think the common-interest exception genuinely applies (for example, a pre-agreed, non-negotiated template with no contentious points), you must: obtain informed, written consent from both; set out exactly what will and will not be shared; consider whether structural separation is needed; and minute why it is reasonable to act for both given the knowledge and bargaining power on each side. If negotiations start or positions diverge, stop acting for one or both immediately.
- Retainer scope and warnings. If you are limiting your role (for example, to drafting only), the SRA cautions against using limited retainers to avoid advising on risk. Make the limits explicit, ensure no party is left without essential advice, and consider signposting independent legal advice if either party is going to be at risk.
- Records and comms. Your engagement letters should name the client, explain who you do not act for, how information will be handled, and the conflict protocol if interests split.
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
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2025 LSAG update: What’s changed and what law firms need to do
Are you prepared for the latest changes to the LSAG guidance?
With the updated AML guidance now in effect, legal professionals need to understand what’s changed and how it affects their responsibilities.
Jonathon Bray joined Harriet Holmes of Thirdfort to break down the key updates and share practical steps to keep your compliance framework up to date.
Compliance Officers Anonymous
Feeling isolated with your compliance worries? Back in July we ran a session to share questions, frustrations and get practical guidance from our panel.
Thank you to everyone for your contributions, let’s do it again!
Watch the recording (Passcode: C4@S73Kh)
Disciplinary Watch
A striking theme this summer is integrity. We see it in cases where lawyers tried to paper over problems, mislead clients or employers, or let personal conduct spill into professional life.
Dishonest conduct always attracts the heaviest sanctions, even where the man-on-the-street might not see a huge issue. In Christopher James Hawkes the solicitor was struck off for removing a client email to hide inaction; in Laura Elizabeth Simpson another strike-off followed a lie to a “difficult” client about an expert’s report. Internal deception also featured: Andrew Brodie was struck off for fabricating an invoice to secure a salary advance, while practice manager Patrick White was barred after misappropriating over £500,000.
Giving false information to the regulator also remains a red line: Christopher Fry was struck off for a false declaration about his own means.
Work “shortcuts” proved career-ending for non-solicitor staff too: legal apprentice Matthew Senior forged a supervisor’s signature; immigration consultant Osaro Idemudia instructed a colleague to upload a client’s signature without consent; and estate planner Ian Heslop falsely stated he had witnessed a client’s LPA signature – invalidating the instrument.
Immigration solicitor Ignatius Etukudoh was rebuked for allowing an unqualified caseworker to lodge a meritless JR, highlighting the importance of supervision of junior staff.
Conflicts and the duty to protect the vulnerable surfaced again. Sole practitioner Yusuf Jamal Siddiqui was suspended after acting on both sides of a conveyancing matter, one client being vulnerable.
Personal conduct outside the office also carry professional consequences: trainee Salhan Mukesh was barred after criminal convictions for common assault and racially aggravated public disorder; and Mohammed Sarfraz received a suspension (suspended) for antisemitic and offensive social media posts.
On systems and controls, AML and Accounts Rules dominated. Several firms were fined for missing or inadequate firm-wide and client/matter risk assessments, weak policies or deficient implementation: Norton Peskett(£25,000), Carter Lemon Camerons LLP (£25,000), CGM Hampshire Limited (£31,045), Core Law Limited (£12,427), Stachiw Bashir Green Solicitors (£10,136), The Waring Partnership LLP (£9,563), Eden & Co Solicitors Ltd (£9,128), Greater London Solicitors Limited (£8,644), Martin L Grove (£7,202), Davenport & Scott Limited (£2,809), Grace & Co(£1,760), Heritage Solicitors (£1,856), Stephen Murray & Co incorporating Penzer & Co (£3,071) and Bladwin Wyatt Solicitors (£4,957). The pattern is consistent with SRA supervision findings: too many firms still lack a living FWRA, robust CMRAs and evidence that policies translate into practice.
COFA Mohammed Islam was personally fined for Accounts Rules breaches, and a Scottish firm, Jones Whyte Law Limited, received a rebuke for Accounts Rules failures discovered after taking over files from another practice.
Takeaways. First, once you cross the line into dishonesty, by deleting an inconvenient email, inventing a document, or “borrowing” a signature – a strike-off is a real prospect. Second, conflicts, dual representation and the protection of vulnerable clients must be treated with zero tolerance. Third, AML and Accounts Rules remain the regulator’s bread and butter: if your FWRA, CMRA and policy suite are not embedded and evidenced, expect a penalty. (Controversially, historic failures are also fair game to the SRA). Finally, conduct in the workplace, online and in private can all be judged against professional standards.
Training your team: Anti-money laundering
The SRA expects that all ‘relevant employees’ practicing within the scope of the Money Laundering Regulations (MLRs) must receive robust anti-money laundering (AML) training. Now is the time to ensure your firm is compliant. Failure to meet these obligations can result in significant fines and regulatory action.
Our comprehensive AML training is designed to equip your team with the knowledge and practical skills needed to identify, prevent, and report suspicious activities, safeguarding your firm from risk. Ensure your firm stays ahead of regulatory requirements and avoids potential pitfalls by enrolling your team today.
Formats available: Online | In person | On-demand
Don’t miss out—request a free quote today!
Safeguard your practice: Independent AML Audit
What we do – contact us for further information about our services
- Outsourced COLP and COFA support
- Compliance audits
- New firm and ABS applications
- Independent AML audits (Regulation 21)
- Training (online, remote, on demand)
- AML and GDPR workshops
- PII cost reduction
- Remote file reviews
- TPMAs
- Escrow accounts
- AML and sanctions searches
Compliance Officers Anonymous: real talk on conflicts, AML and sleepless nights
In our most candid webinar yet, compliance officers shared the questions that keep them up at night — from difficult billing complaints and AML headaches to whether you really have to report that incompetent solicitor on the other side. We summarise the highlights and practical takeaways from a lively, no-barriers discussion.
When conduct unravels: undertakings, integrity and the solicitor’s duty
A recent tribunal decision is a stark reminder of the vital importance of integrity in legal practice. A solicitor was struck off for misleading another party, failing to discharge a property undertaking and trying to head off any reporting to the SRA.
We explore what went wrong, how undertakings should be treated, and the wider lessons for all solicitors.
Legal Ombudsman starts publishing upheld complaints — what does this mean for law firms?
In a significant move, the Legal Ombudsman (LeO) is now publishing detailed decisions in cases where complaints have been upheld. The idea is to improve transparency and help clients make informed choices — but for law firms, the stakes have just been raised.
Being publicly named can cause serious reputational harm, even if the underlying issue was a one-off lapse.
From a compliance perspective, is there an opportunity? Firms should view the published decisions as learning opportunities: what could have been done to avoid the issue in the first place, and the complaint escalating? Were there signs of dissatisfaction that could have been addressed earlier?
This post summarises the first three published cases.
