Following consultations, which began in 2021, on the Solicitors Regulation Authority’s (SRA) approach to issuing financial penalties to law firms and solicitors for proven misconduct, the new financial penalty regime has come into force.
This follows the change in legislation in July 2022 which increased the SRA’s fining power from £2,000 to £25,000, with any instances which warrant a higher financial penalty referred to the Solicitors Disciplinary Tribunal (SDT).
The SRA receive over 10,000 complaints about the firms and individuals they regulate every year, and the changes to the penalty system have been introduced to speed up the resolution of these cases.
What are the changes?
The maximum fine the SRA can now impose on a firm has been increased to 5% of turnover, with individuals fined based on their ‘default’ salary in cases of low-level misconduct, should evidence of income be withheld.
Fixed penalties of up £1,500 have also been introduced for firms for a small number of lower-level breaches of SRA rules to ensure these incidents are ‘dealt with in a more effectively and in a timely way’.
Misconduct which may warrant a fixed penalty includes:
- Failure to comply with a regulatory request for information – for example declarations of compliance with AML requirements, submitting your Firm Diversity Data return.
- Failure to publish the required costs or complaints information, or display a clickable logo, in accordance with the SRA Transparency Rules.
- Failure to ensure appropriate approval, or notification of, firm role holders.
The SRA have also made changes to guidance relating to sexual misconduct, discrimination, or any form of harassment, with financial penalties only considered in exceptional circumstances.
Find out more about the SRA’s approach to financial penalties by clicking here.
Get in touch
If you are unsure how the changes to SRA’s financial penalties may affect you or your law firm, get in touch with our legal specialist, PM+M partner, Helen Clayton, by clicking the button below.
