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A regulator must learn from its mistakes

The SRA’s downplaying of issues which are extremely serious for individual solicitors is not encouraging, writes Susanna Heley for the Solicitors Journal.

In last month’s column (SJ159/38), I included some commentary about the case of SRA v Chan and Ali. I noted the very explicit criticisms made by the High Court of the way the SRA had framed its case. That message could not have been clearer. One would have thought that any organisation which had received such criticism would have at least noted it and taken the message back to assess what lessons could be learned.

On 7 October, the SRA’s legal and enforcement directorate made its report to the SRA’s regulatory risk committee. It devoted six of 22 paragraphs to the Chan and Ali case yet made no mention of the specific criticism directed at the regulator regarding the formulation of its charges.

The court said: ‘This sort of drafting – whether in the context of Solicitors’ Disciplinary Tribunal (SDT) proceedings or any other kind of disciplinary or regulatory proceedings – is unacceptable. It would not be tolerated in the civil courts. It would not be tolerated in the criminal courts. It should not be tolerated in disciplinary tribunals.’

Apparently the SRA did not consider such unequivocal condemnation to be worthy of inclusion in the published report. Instead the report considered the decision a vindication of its belief that some solicitors involved in the promotion or execution of stamp duty land tax avoidance schemes had lacked integrity. No mention of any adverse comments was made at all.

That same report reflected changes in the approach of the legal and enforcement directorate in relation to a pilot scheme which sees the SRA’s legal team getting involved in investigations at a much earlier stage. Changes to the management structure were also noted.

The SRA’s achievement of key performance indicators (KPIs) in relation to the timeliness of issuing proceedings was a continuing theme of the report which reveals that the regulator has been working hard to meet its targets of issuing proceedings within a maximum of eight months for complex cases.

Those targets were only introduced as November 2014. Since that time, 86 per cent of the cases issued have been within target. We are not told how far outside the KPI targets those unlucky 14 per cent fell. We are told that the directorate has only four current cases which are over eight months old and therefore outside its own KPIs. This equates to around 7.5 per cent of the total cases.

While the report highlights the SRA’s focus on ensuring the timely issue of proceedings, there is no evidence of that same focus being brought to bear on investigations before they arrive in legal and enforcement. Let us not forget that the cases which the directorate are including in its report are cases which have already been referred to the tribunal. They have been through an investigation process which may have lasted months or even years.

I have jumped on my soapbox before on the issue of delay in investigations. The impact on the solicitor and the firm under investigation is appreciable. Raised insurance premiums,the inability to get insurance, the need to notify third parties such as accreditation schemes of open investigations, and the sheer stress and uncertainty of dealing with these issues are a potent and highly toxic mix.

Against this background, to see the SRA issue a bland report downplaying issues which are extremely serious for individual solicitors is not encouraging. To note that the regulator appears officially to report on a case to provide feedback to those responsible for its operation without commenting on very clear judicial criticism is infuriating.

I hope that any private reports which may have been made to the regulatory risk committee were more informative and helpful than the report published on the SRA’s website. I would like to see the regulator following through on its rhetoric and demonstrating that it is capable of acknowledging and learning from its mistakes.

As a profession, we ought to be asking very serious questions as to how our regulator is processing critical feedback from the courts and from other sources. It is possible that the SRA chooses to analyse such critical comments in private. Given that the comments were made in public and the report from legal and enforcement has been published, one may be forgiven for being sceptical as to that likelihood.

For more information or guidance, please contact:

Susanna Heley

T. 020 7227 7463

This article was first published by Solicitors Journal on 17 November 2015, and is reproduced by kind permission. You can read the original article by clicking here.


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