SRA Code of Conduct in Practice - Compliance and reporting d...

Learning Outcomes

After reading this article, you will understand the solicitor’s duties for compliance and reporting under the SRA Code of Conduct. You will be able to identify events or conduct that must be reported to the SRA, differentiate between automatic notification and judgment-based reporting, explain the roles of compliance officers, and outline the systems required to ensure ongoing regulatory compliance—skills critical for SQE2 exam scenarios.

SQE2 Syllabus

For SQE2, you are required to understand the practical application of the SRA Code of Conduct’s compliance and reporting obligations. Focus your revision on:

• The requirement to keep up to date with regulatory law and SRA rules.
• The duty to cooperate with the SRA and promptly respond to regulatory requests.
• Notification of prescribed events, including criminal charges and insolvency.
• Immediate and judgment-based reporting of serious regulatory breaches.
• The functions and responsibilities of compliance officers for legal practice (COLPs) and finance (COFAs).
• The role of managers in ensuring firm-wide compliance.
• Record-keeping and documentation to evidence compliance in practice situations.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. What must a solicitor do if they receive a police caution for a non-work-related offense?
2. If a solicitor suspects a serious breach of SRA regulatory arrangements by a colleague, what are their obligations?
3. Who has the ultimate responsibility for a firm's compliance with SRA regulatory requirements?
4. What information should a solicitor provide if requested by the SRA during an investigation?

Introduction

Compliance with the SRA Code of Conduct is central to legal practice in England and Wales. Solicitors must meet strict requirements to uphold professional standards and public trust. This article explains solicitors’ compliance and reporting duties under the SRA Code, focusing on statutory and regulatory obligations, notification triggers, judgment-based reporting, and the practical functions of compliance roles. Understanding these rules is essential for SQE2 as they frequently arise in both scenario-based questions and in application to problem-solving tasks.

Compliance Duties Under the SRA Code

Solicitors are personally and collectively responsible for compliance with the SRA Code and regulatory framework. The primary duties include:

• Maintaining up-to-date knowledge of law and SRA requirements.
• Cooperating fully with the SRA, ombudsmen, and other regulators.
• Responding promptly to regulatory requests for information, documents, and explanations.
• Ensuring their firm operates proper systems to meet ongoing SRA compliance standards.

Key Term: compliance
Actions, procedures, and systems established to ensure that solicitors and firms meet SRA regulatory requirements at all times.

Key Term: SRA Code of Conduct
The document setting out standards and requirements for solicitors and law firms, including compliance, notifications, and professional obligations.

Notification Requirements

Certain events require automatic notification to the SRA. These occur regardless of the solicitor’s personal view on the seriousness of the situation.

• Criminal charges, convictions, or cautions (including those unrelated to practice).
• Personal bankruptcy or insolvency.
• Material change to information previously given to the SRA (e.g., change in practising arrangements).
• Discovery that previously supplied information was inaccurate or misleading.

Failure to notify such events is regarded as a significant breach.

Key Term: notification requirement
The duty to proactively inform the SRA about specific events, regardless of a personal assessment of seriousness.

Reporting Obligations

Not every possible breach of regulatory obligations requires reporting. Solicitors must use judgment to determine whether a matter constitutes a “serious breach” that should be reported. Key considerations:

• Acts of dishonesty, abuse of trust, or discrimination.
• Repeated or widespread poor conduct.
• Conduct causing or risking significant harm to clients or public confidence.
• Evidence of criminal activity or regulatory evasion.

If in doubt, solicitors should err on the side of reporting.

Key Term: serious breach
A violation of SRA regulatory arrangements that poses a significant risk to clients, the public, or the integrity of the profession and so must be reported to the SRA.

Fulfilling Reporting Duties

There are two main reporting channels:

• Direct to the SRA (recommended when urgency or seriousness is clear, or if unsure that anyone else will make the report).
• Via the firm’s designated compliance officer (for example, reporting to the COLP or COFA if the internal systems ensure onward reporting to the SRA).

When a solicitor becomes aware of a fact or incident that might require reporting, they must keep records of the facts, their decision process, and the steps they take.

Worked Example 1.1

A solicitor is notified that a colleague has repeatedly borrowed money from a client account to cover personal expenses, intending to repay the sums soon. The solicitor is unsure if this is theft, but knows it is unauthorised.

Answer:
The solicitor must recognize this as a serious breach concerning client money and trust, requiring a prompt report to the SRA. They may also report to the firm's COFA, but must ensure the information is passed to the regulator. Proper documentation is needed to evidence their action.

Cooperation and Documentation

Solicitors are required to:

• Cooperate with SRA investigations or requests.
• Provide full, accurate, and timely information, explanations, and relevant documents.
• Never mislead, conceal, or destroy documents relevant to an SRA investigation.

Failure to answer SRA requests or to mislead the regulator is itself a separate disciplinary breach.

Key Term: cooperation
The obligation to respond honestly, fully, and promptly to requests from the SRA or other regulators.

Compliance Roles and Responsibilities

Managers’ Duties

Managers (e.g. partners, directors, or sole principals) hold ultimate responsibility for a firm’s compliance. They must ensure all SRA rules are followed, put effective supervisory systems in place, monitor risks, and keep appropriate records.

Key Term: manager
A person with governance responsibilities for the operation of a law firm, including partners, directors, and sole principals.

Compliance Officers (COLP/COFA)

Every authorised firm must have at least:

• A Compliance Officer for Legal Practice (COLP)—oversees legal practice compliance and SRA rules.
• A Compliance Officer for Finance and Administration (COFA)—oversees compliance with SRA Accounts Rules.

Key Term: COLP
The senior individual responsible for a law firm’s compliance with SRA rules, including governance, client confidentiality, and reporting breaches.

Key Term: COFA
The individual responsible for ensuring compliance with rules concerning client money and financial administration, including prompt reporting to the SRA about finances.

Worked Example 1.2

A firm’s COFA discovers that the firm’s reporting accountant found evidence of improperly handled client funds. However, the COFA feels the firm has made good the breach and is considering whether to report.

Answer:
The COFA must report any serious breach regarding client money to the SRA, even if the sums have been replaced, as the fact of the original breach is itself a notifiable event. Records of the breach and remedial action must be kept.

Record-keeping and Systems

Firms must keep clear records of:

• Any breach of SRA regulatory arrangements.
• Notifications and reports made to the SRA or via compliance officers.
• Steps taken in response to confirmed or suspected breaches.

This documentation is essential evidence of compliance if challenged.

Revision Tip

Keep reliable records of all decision-making related to compliance or reporting duties. Detailed attendance notes and breach registers provide essential evidence if the SRA investigates your conduct or the firm’s systems.

Summary

Key Point Checklist

This article has covered the following key knowledge points:

• Solicitors must keep up to date with SRA law and requirements, and comply fully with the SRA Code of Conduct.
• Automatic notification of certain events (e.g. cautions, insolvency) is required, regardless of the solicitor’s judgment.
• All solicitors must report serious breaches, usually involving dishonesty, abuse of trust, or widespread problems.
• Managers have ultimate responsibility for compliance within a firm.
• Compliance officers (COLP and COFA) must record and report relevant breaches.
• Cooperating with the SRA—responding to requests for information, documents, and explanations—is mandatory.
• Accurate records of decisions and actions must be kept to evidence compliance.
• Failure to fulfill compliance or reporting duties can result in regulatory action or disciplinary sanctions.

Key Terms and Concepts

• compliance
• SRA Code of Conduct
• notification requirement
• serious breach
• cooperation
• manager
• COLP
• COFA