In November 2021, the SRA announced proposals to significantly hike its fining powers in addition to a new ‘fast-track’ system for fixed penalties for lesser breaches of its rules. This is not the first time the SRA has made public its intention to ratchet up fines. In 2013, (updated in 2019), the SRA published a consultation paper entitled, “Proposal to increase the SRA’s internal fining powers”. In that consultation, a number of possible fining ranges were mooted; £10,000, £50,000, or £100,000 from the existing limit of £2,000. Here we will take a look at the latest proposals by the SRA to increase the possible fines for members and the response to this by the Law Society.
What changes is the SRA recommending to its fining powers?
Proposals to increase the SRA’s fining powers are only at the consultation stage, (the consultation closed on 11 February 2022). The consultation aims to review the approach to financial penalties for law firms and solicitors issued by the SRA who fall short of the expected professional standards. It also considers measures to:
- Allow faster and easier resolution of cases, with the goal of improving public protection, and
- Save time and costs and reduce related stress within the profession.
The consultation sought views on increasing the limit on SRA fines from £2,000 to £25,000. The idea is that by doing so, the SRA can deal with a broader range of disciplinary matters and only refer more serious cases to the SDT. Other recommendations in the new consultation include:
- Introducing a ‘fixed penalty’ of up to £1,500 for less serious breaches of the SRA rules. The SRA argue that a fixed penalty system would ensure higher levels of transparency and consistency in how penalties are applied. They also propose that solicitors and law firms would still have the right of appeal to both the outcome of a decision and penalty imposed at the SDT.
- Taking into consideration the turnover of firms and income of individuals when deciding on fine amounts.
- For serious breaches, have the power to fine firms up to 5% of their annual turnover. Where an individual is fined for a serious breach, the fine may be based on their income. As the proposals explain, “This would, for example, allow different levels of fine to be issued to a low earning junior solicitor compared to a senior equity partner for similar offences”.
When announcing the consultation, the SRA’s Chair, Anna Bradley, said, “We know that the overwhelming majority of solicitors and firms do a good job, providing high-quality legal services to the public, and meeting the standards we set. But when those standards are not met, we need to step in to make sure that consumers are protected and confidence in the profession is well placed”. “This is a real opportunity to update our enforcement approach and we would welcome views from across the profession, other regulators and more widely”.
The SRA also points out that the current fining regime is now a decade old, and changes are needed in line with the new Enforcement Strategy and the SDT adoption of the civil standard of proof in line with that used by the SRA.
What has been the response to the SRA’s proposals?
In its formal response to the consultation, The Law Society has made it clear that increasing fines “twelvefold” is “not appropriate” and have recommended a more moderate fine range of between £5,000 and £7,500. The Law Society’s reasons that the changes would reduce the number of serious and significant SRA breaches that go to the SDT under the current system, thereby reducing transparency of the decisions made. As the Law Society president, Stephanie Boyce, explains, “The proposed substantial increase to the threshold would potentially include many more serious or significant cases which currently go before the SDT and where full reasons for decisions are transparently set out in written judgments and published on the SDT website”. Their concern is that such changes would give the SRA too greater powers to act as “investigator, prosecutor and judge”.
The Law Society also disagree with the intention to implement a fixed penalty regime; “We do not consider there is a sufficient evidential basis to justify the need for a new fixed penalty regime”. As such, they believe that the current system is fair and appropriate, and there is no need to implement an alternative regime.
The Law Society appear to accept that an appropriate increase to the threshold limit of fines is reasonable, but ruling out the need for a new fixed penalty regime. Given that the aim is to ultimately provide greater confidence to law service consumers, this must also be matched with trust, fairness and transparency within the legal sector’s regulatory framework. We will keep you updated when the SRA makes a decision on its proposed fining regime later in 2022.
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