Solicitors Regulation Authority of England and Wales publishes latest annual reports

The Solicitors Regulation Authority (SRA) has published its suite of annual reports, which cover five core topics, these are: ‘Anti-money Laundering‘, ‘Authorisation‘, ‘Client Protection‘, ‘Education and Training‘ and ‘Upholding Professional Standards‘.

Key findings from the reports include:

  • There has been a year-on-year increase in the number of solicitors qualifying through apprenticeships, firms offering recognised training and solicitors gaining higher rights of audience qualifications.
  • There is further evidence of continued growth of the legal sector in Wales, with Welsh firms now accounting for a combined turnover of over £435 million, up from £370 million five years ago.
  • £10.4 million was paid out from the Compensation Fund, up £2.9 million from 2018/19, with the average payout around £28,000.
  • The Upholding Professional Standards Report, includes a review of the diversity characteristics of solicitors involved in the SRA’s enforcement processes. It has been found that as was the case in a similar analysis published last year, there is an over-representation of Black, Asian and minority ethnic solicitors, and men, in both concerns raised and investigated with the SRA when compared with the diversity of the profession as a whole. Based on this the SRA are currently commissioning independent research into the societal and structural factors that might be driving the over-representation in reports made to us, as well as reviewing our own decision making and working to improve diversity data collection.

Anna Bradley, Chair of the SRA Board, has said: “Publishing this suite of annual reviews is an important part of our ongoing commitment to transparency and accountability. Last year was difficult for everyone, and I’m pleased that our reports show that both we and the profession rose to the challenge, adapting to new ways of working, maintaining performance and services and showing real resilience in the face of the pandemic. Since we published our last set of reviews, we have made significant progress in many areas, not least the work now well underway to understand and address what may lie behind the overrepresentation of Black, Asian and minority ethnic solicitors, and men, in our enforcement processes. Our 2019/20 Upholding Professional Standards report again confirms the historic trends we have already seen and reaffirms how important it is that we continue to push on with this work as quickly as possible.”

Access the full suite of reports here. 

Legal Sector Affinity Group for England and Wales publishes new guidance on anti-money laundering and SRA sectoral risk assesment

The Legal Sector Affinity Group (LSAG) which is made up of representatives from the different regulatory and representative bodies in the legal profession, releases information and guidance for legal services professionals. The LSAG 2020 guidance provides a detailed commentary on recently amended UK regulations on money laundering (as well as the 2017 regulations).

The LSAG guidance provides an update to material previously published in 2018, updating the content to match the new regulatory environment. Key changes in the new publication include:

  • Expanded guidance on understanding source of funds and source of wealth
  • A new section addressing the need for firms to understand the technology they are using
  • Clarifications on high-risk sectors, accepting cash into the client account, customer due diligence (CDD) on referrals from another legal practice, timing of CDD/exceptions
  • Discrepancy reporting to Companies House, and other relevant registries from new duty/obligations introduced from January 2020

As well as this the SRA have produced further guidance, in light of a UK Government risk assessment, published in December, producing a legal sector-specific money laundering risk assessment, focused on the specific challenges of the sector.

Juliet Oliver, SRA General Counsel, said: ‘Tackling money laundering is a priority for all of us and we know the vast majority of firms are committed to keeping the proceeds of crime out of the profession. These documents offer comprehensive information on some of the better ways to achieve this. Our sectoral risk assessment identifies and discusses the biggest issues and emerging threats currently facing providers of legal services as they look to combat money launderers. It is complemented by the LSAG guidance, which covers all the bases of the 2017 regulations, plus a thorough review of how regulations and expectations on firms have evolved since then.’

Read the LSAG guidance here, or the SRA’s risk assessment here. 

Singapore: unclaimed Money Fund to fund pro bono services

Recent amendments to the Legal Profession Act, passed in Parliament on 20 March, have provided a practical solution to unclaimed client money. Currently, if a client becomes uncontactable, the legislation does not provide for what happens to unclaimed client money, and a law practice would have to continue to hold such money. The amendments to the Legal Profession Act introduces a new framework to deal with unclaimed client money – a practitioner or law practice may transfer such money to a new Unclaimed Money Fund, maintained and administered by the Law Society.

The Law Society may invest or use the money in the Unclaimed Money Fund to fund pro bono services provided by the Law Society or through Law Society Pro Bono Services (a registered charity and Institution of a Public Character), which is a wholly-owned subsidiary of the Law Society.

Currently, law practices in Singapore are required to hold client money in a separate account, known as a client account, until money is returned or paid out according to the client’s instructions. A practitioner who holds or receives client money is required to submit an accountant’s report to the Law Society together with his application for a practising certificate on a yearly basis.

If a client becomes uncontactable, the law practice concerned would have no other option but to continue to hold any unclaimed money. In respect of practitioners wishing to retire or cease practice (in particular sole proprietors), unclaimed client money has caused inconvenience as only a practitioner with a practising certificate is permitted to operate a client account of a law practice. The only direction the Law Society has been able to give to retiring practitioners is to find another practitioner in practice willing to act as legal manager to hold the unclaimed client money. The legal manager would have to account to the Law Society for such moneys with an accountant’s report on a yearly basis.

With the recent amendments to the Legal Profession Act, practitioners and Singapore law practices will now be able to transfer unclaimed client money into the Unclaimed Money Fund, provided that they satisfy certain requirements (prescribed by the Law Society) and the Law Society approves the transfer. These requirements would include making reasonable efforts to return the money to the client.

Should the lawful owner of the unclaimed client money resurface, there is a mechanism for such persons to apply to the Law Society for the transferred money to be returned. Such applications must be made within a six-year limitation period. Nevertheless, Law Society will have a discretion to make ex gratia payments from the Unclaimed Money Fund to claimants who apply after the limitation period.

The new framework covers unclaimed intervention money as well. The Law Society has the power to intervene in a law practice in specified circumstances, including where a sole proprietor has died. As part of the intervention, the Law Society may take over the administration of the client account. Client money in these client accounts is called intervention money.

Intervention money is transferred into a special account held by the Law Society. If the intervention money is unclaimed after six years, it is credited to the Law Society’s Compensation Fund, which is a fund to compensate those who suffer financial losses due to a practitioner’s misconduct.

The amendments to the Legal Profession Act provide for intervention money that has been unclaimed for 6 years in the special account to be transferred to the Unclaimed Money Fund instead of the Compensation Fund.

Article first published on the Law Society of Singapore website.