Regulation, the SRA and COVID-19

Published On - July 7, 2020

Duncan Finlyson Articles

Businesses of all kinds, solicitors’ firms included, are facing unprecedented problems in the wake of the COVID-19 outbreak, and merely knowing whether or not the business will survive and how to pay and continue to employ staff is concern enough for most.  Inevitably, therefore, matters are going to be overlooked, or given less priority than perhaps they would otherwise. Issues that seem at first to be less of a concern than the sheer problems of survival on a day-to-day basis, are going to be relegated to the bottom of the pile – especially if the resources to deal with those issues are not currently available.

One of the areas where many firms have been forced to take as robust an approach as possible is as to how they deal with issues in relation to the various regulatory requirements to which they are subject.  Firms that have had to furlough staff, and yet still continue to provide support to clients, have realised that not everything that they were doing can continue to be done in quite the same way.  Meetings have needed to be postponed or moved onto online video platforms such as Zoom and Microsoft Teams.  Court appointments have been put back.  Completion dates for sales and purchases have needed to be revised. Service levels for correspondence and telephone responses have had to be extended.

Positive response from regulators

Generally, most of the regulatory organisations that are involved in the work of solicitors have been understanding to varying degrees.  Clearly, it is not possible for any of them to tell firms that for the duration of the pandemic they can ignore regulatory requirements.  Those requirements are, in the main, intended to protect clients and the public and removing those protections would risk harming those objectives. However, being realistic in terms of the manner of enforcement and the degree of latitude allowed can form part of the current regulatory process.

A distinction needs to be made between the types of regulatory breach and the action taken as a result.  Thus, flagrant instances of fraud will inevitably continue to attract the full weight of regulatory sanctions whilst failing to observe minor time limits would, it is hoped, be dealt with in a much less draconian manner.

The SRA’s approach to compliance

The Solicitors Regulation Authority (SRA) have indicated that they expect solicitors and firms “to continue to meet the high standards the public expect”. This, they state, includes doing everything to comply with the rules and Principles including “serving the best interests of clients and upholding the rule of law”. The SRA have, however, acknowledged that we are all undergoing exceptional conditions and that as a consequence they will take a “proportionate approach to enforcement”. This will include focusing on serious misconduct and distinguishing between those “who are trying to do the right thing, and those who are not” as well as by the use of waivers where doing so does not result in unwanted consequences.

To assist the profession, the SRA has produced a range of guidance materials many of which are accessible through their ‘Coronavirus – hot topic link’ (www.sra.org.uk/home/hot-topics/coronavirus/).  These include:

  • a range of questions and answers,
  • guidance dealing with issues such as education and training, cybersecurity and money laundering,
  • health and wellbeing advice, and
  • a short video looking at some of the relevant issues.

This does not mean, however, that firms can merely ignore regulation until the pandemic has passed, or even for that matter simply carry on as if nothing had happened.  The SRA have indicated that they “expect firms to have appropriate contingency plans in place for disruption” which means that firms need to consider what effect, if any, coronavirus will have upon their practice, their clients and the way that services are delivered. Having then done so they will need to put in place contingency arrangements to ensure that services are not compromised and clients are not placed in a detrimental position.  In other words, it is essentially an extension of the contingency plan that all firms should have in place anyway.

From the point of view of the SRA firms should be doing everything that is required of them wherever they can.  If they need, for any reason, to depart from that then they should to look at the overall circumstances and, if they are doing something that is different from how they would normally have done it, making sure that they document in detail the circumstances of the issue, the reasons for doing what they have done and the actual steps that they have taken.  That way they will, in the future, be able to provide justification for the actions taken.

The SRA, often in conjunction with the Law Society, have produced guidance on dealing with a number of areas including the witnessing of documents, client due diligence, PII, staffing issues, supervision arrangements, the accounts rules, undertakings, training, confidentiality, the loss of key role holders and a number of other topics.  There follows a list of these various issues together with links to where they will be found at the end of this article which we hope will be helpful. You may also wish to refer to articles on this site including Cybersecurity and Confidentiality During Lockdown, Law Firm Compliance Concerns During Coronavirus Lockdown, CDD with Clients and Law Firms in Self Isolation Lockdown and COVID-19 and Solicitors.

COVID 19 Information Resources

SRA
LawCare
Law Society
GOV.UK
ICO
FATF
Share on social media