In Industry Insights

Unforeseen circumstances such as the compliance officer’s death, incapacity, cessation of employment, long-term illness or leave, or furlough can result in a firm ceasing to have a COLP or COFA. 

 

If the firm does not have a COLP or COFA this is a breach of rule 8.1 of the SRA Authorisation of Firms Rules and therefore an application for temporary emergency approval of a compliance officer must be made to the SRA. This is done via the firm’s MySRA portal within 7 days of the event that gives rise to the lack of compliance officer.

The SRA will only approve a request for temporary emergency approval of a replacement compliance officer if:

  1. you could not reasonably have commenced a substantive application in advance of the non-compliance (i.e. more than 28 days beforehand);
  2. you tell the SRA (via the firm’s MySRA portal) within seven days of the event giving rise to the inability to perform the role; and
  3. the SRA believes that the replacement compliance officer is fit and proper to be a compliance officer.

The temporary emergency approval is only valid for 28 days, and a substantive application (see below) needs to be submitted during this period.

It is worth noting that if remote working (i.e. by phone, email, and video conferencing) is possible that the COLP or COFA can remain in their role. Rule 2.1d of the SRA Code of Conduct for Firms requires that compliance officers must be able to perform their duties, but it does not stipulate how they should do so.

The SRA does not need to know if a compliance officer is simply unwell or on leave for a week or two. It is good practice to have deputy compliance officers to cover in such circumstances, but deputy roles are not a requirement of the SRA. Nor are they recognised.

In accordance with Rules 2.1a-c of the SRA Code of Conduct for Firms, the firm has to have effective governance structures, arrangements, systems and controls in place that ensure:

  • the firm complies with all of the SRA’s regulatory requirements, as well as wither regulatory requirements and legislative requirements, that apply to the firm;
  • the firm’s managers and employees comply with the SRA’s regulatory arrangements that apply to them; and
  • the managers (owners) and interest holders and those employed or contracted with do not cause or substantially contribute to a breach of the SRA’s regulatory requirements by the firm or the managers or employees.

It follows that if the firm’s managers know of the forthcoming inability of a compliance officer to perform their role, either in the office or remotely, more than 28 days beforehand then a substantive application has to be made to the SRA via the firm’s MySRA portal for a replacement compliance officer.

If the firm has a turnover of less than £600,000 per annum Form FA6 for a deemed compliance officer notification is to be completed and submitted, and if the turnover is more than £600,000 per annum Form FA2 is to be completed and submitted. See rule 13 of the SRA Authorisation of Firms Rules to see who can be deemed approved as a COLP or COFA.

Who can be a COLP or COFA?

The SRA will need to be satisfied that the candidate is eligible to be the COLP or COFA, is a fit and proper, and consents to the designation.

The candidate cannot have been disqualified from acting as a compliance officer; and, in the case of the COLP, must be an authorised person (an individual who is authorised to provide reserved legal services by a regulator approved by the LSB, for example, a solicitor, barrister, or a legal executive).

COFAs need to have relevant financial management experience in a law-firm and know and understand the SRA’s Solicitors Account Rules.

Compliance officers must (with limited exceptions) be managers or employees of the firm concerned. ‘Employee’ can mean a person engaged on a contract for services (i.e. a consultant), but you may have to persuade the SRA that is an acceptable arrangement. And the consultant may also demand danger money!

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