Happy Friday
The regulators have been busy again, with the SRA confirming that it is pressing ahead with its client money safeguard reforms, including annual accountants’ report declarations and new restrictions on who can hold COLP and COFA role. We have written about the separation of powers issue below, and it is also the topic of our next free webinar.
There is also a chunky Legal Ombudsman consultation which should make every firm revisit its complaints process. The proposed case fee structure moves towards “polluter pays”, costing firms up to £1,500 where the complaint reaches an ombudsman’s final decision. Add in a proposed extra fee where no final response was issued within eight weeks, and complaint handling becomes even more important.
HMRC has finally given more clarity on when conveyancers need to register as tax advisers. Spoiler: if you are paid to submit SDLT returns or pay SDLT on behalf of clients, HMRC expects you to register. We have turned a reader’s question on that into this week’s Compliance Corner.
Lots more included below…
Almost there.
Jon and the team
Separation of powers sounds sensible. But can law firms make it work?
The SRA is trying to solve a real problem. Too much control in too few hands can create obvious risks, especially where client money is involved.
But will the new COLP/COFA restrictions really create better governance, or will some firms simply move the compliance titles to people with less power, less authority and less ability to challenge?
In this article, we look at the proposed new rules, the £600,000 turnover and £2m client money thresholds, the difficult position for owner-managed firms, and whether separation of titles is the same thing as separation of power.
OpenAI, Anthropic and the rise of the compliance technologist
For years, legal conferences have asked whether AI will replace lawyers. That is probably the wrong question.
As AI becomes embedded into client onboarding, drafting, knowledge management, supervision and compliance monitoring, the more interesting question is: who is going to govern all of this?
This article argues that compliance professionals may be unexpectedly well placed for the next stage of legal AI. Law firms will need people who understand regulation, risk, operations and technology. Will the “compliance technologist” soon become one of the most valuable people in the room?
Independent AML audits for law firms: how to prepare for a Regulation 21 audit
For many firms, an “independent audit” only becomes urgent when the SRA asks about it during a visit.
An independent AML audit should be treated as a proactive control. Done properly, it is a structured review of whether your AML framework works in practice, not just whether the right documents exist somewhere in the shared drive.
However, nobody likes being audited. This guide explains what to prepare, what the auditor is likely to ask for, how file sampling works, and how to make the process useful rather than unnecessarily painful.
The file review fix: shifting the narrative on supervision
Do we have to do file reviews? How do we get people to engage with them? Is there a way to make the process less miserable?
Sam’s latest article looks at file reviews as part of effective supervision, not just another form to complete. The core idea is simple: if file reviews are treated as a collaborative learning exercise, rather than a compliance chore, they can improve quality, culture, supervision and risk management at the same time.
There is also a practical suggestion for firms willing to try something different: take a team off timetable for an afternoon and review files together.
News and guidance
SRA confirms client money safeguard reforms
This is the big regulatory news of the week.
The SRA has confirmed that it is sending proposed rule changes to the Legal Services Board following its consultation on protecting client money. Although this is still subject to LSB approval, the changes are expected to take effect early next year.
The package includes two main strands.
First, firms that hold client money will have to submit accountant reports every year, a return to the previous position. Late or non-submission will lead to fixed financial penalties.
Secondly, firms will face new restrictions on who can hold COLP and COFA roles. For firms with more than one manager or owner, the rule will apply where annual turnover exceeds £600,000 or where the firm has held or received more than £2m in client money. In those firms, people who can determine or direct significant management decisions about the structure or running of the firm will not be able to be COLP or COFA.
There is a slightly different rule for sole owner-manager firms. If turnover exceeds £600,000, the owner-manager cannot be COLP or COFA. If turnover is below £600,000 but client money exceeds £2m, the owner-manager cannot be COFA but can remain COLP.
What should firms do now?
Start by mapping your current governance arrangements. Who owns the firm? Who makes significant management decisions? Who controls bank mandates? Who approves client account transfers? Who is COLP, COFA, MLRO and MLCO? And is there any real independent challenge in the system?
For some firms this will be straightforward. For others, particularly owner-managed practices just above the thresholds, this could raise difficult succession, recruitment and governance questions.
This is also the topic of our next webinar. Details below.
SRA updates effective supervision guidance
The SRA has updated its guidance on effective supervision, with a clear post-Mazur emphasis on delegation, accountability and the supervision of unauthorised staff.
The main point is that supervision cannot just exist on paper. The SRA says firms and regulated individuals remain accountable for the work they supervise, and that supervision arrangements must be risk-based, understood, and effective in practice. There is no single model: the right approach depends on the risk of the work, the competence and workload of the person being supervised, the supervisor’s capacity, client vulnerability, whether work is remote or hybrid, and whether the work involves reserved legal activities.
Following Mazur, an unauthorised person can carry out tasks within the scope of conducting litigation for, and on behalf of, an authorised individual. But the authorised person remains responsible and must exercise proper direction, management, supervision and control.
There are some practical prompts for firms. Supervisors need enough visibility of work to identify patterns and risks, not just isolated errors. Higher-risk work may require awareness of every file; lower-risk, standardised work may justify sampling, provided the sample includes work the supervisee has not chosen to show the supervisor. Checks should cover legal quality, compliance with firm policies, ethical and regulatory issues, and file management.
The SRA also makes the obvious-but-often-missed point that being in the same office is not supervision. Equally, remote or hybrid working is not a problem in itself, provided the arrangements are deliberate and effective. Good practice includes clear escalation rules, documented supervision arrangements, file notes or emails evidencing supervision where appropriate, daily check-ins for remote workers, shared task lists, virtual open-door support and real-time document review.
What should firms do now?
Review your supervision policy, file review process and team structures. Make sure every person delivering legal services knows who supervises them, what they can do without approval, what must be escalated, and how supervision is evidenced. Also check supervisor capacity. A partner with a full caseload and a large team may be a supervisor in name only.
Legal Ombudsman consultation: complaints are about to get more expensive
The Legal Ombudsman has published a consultation on scheme rules, case fees and publication of decisions.
The case fee proposal is the headline. At the moment, the standard case fee is £400, with some discretion not to charge. The proposed new structure is tiered:
- Early resolution: £200
- Investigation resolved without an ombudsman final decision: £750
- Ombudsman final decision: £1,500
There is also a proposed additional £400 fee where a firm has failed to issue a final response within eight weeks. LeO says around one in four complaints reaching it involved no final response from the service provider.
The consultation also proposes a significant shift on publication. LeO is moving towards considering every ombudsman final decision for publication, including decisions where there is no finding of poor service. At the moment, only certain decisions tend to be published.
The consultation opened on 10 June 2026 and closes at midday on 2 September 2026. Implementation is expected from 1 April 2027, subject to approval.
What does this mean for firms?
Complaints handling needs to become more disciplined. And possibly more commercial.
A good complaints process should do three things:
- spot dissatisfaction early;
- give a clear, fair and timely final response; and
- resolve service issues before they become formal LeO complaints.
The proposed fee structure is not just a cost issue. It also changes the risk profile of complaints. A poor or late complaint response could now carry direct financial consequences, quite apart from the time, stress and reputational impact of an ombudsman decision.
HMRC finally explains when conveyancers should register as tax advisers
HMRC has published guidance and a fact sheet on the new tax adviser registration regime. As expected, the wording is broad: if you interact with HMRC about someone else’s tax affairs and get paid for it, HMRC considers you to be a tax adviser. Interacting includes phone, post, email, GOV.UK messages, making payments, and sending returns, claims or other documents.
The key point for conveyancers is now much clearer. HMRC’s communications fact sheet says that if you are paid to submit SDLT returns or otherwise interact with HMRC on behalf of clients, you are required to register. It also says that having an SDLT Online account is not the same as being registered under the new Tax Adviser Registration service.
The Law Society’s Q&A reaches the same practical conclusion: filing an SDLT return on behalf of a client is enough to bring a firm in scope, even if no tax advice is being given and the work is merely incidental to conveyancing.
Registration opened on 18 May 2026 for most firms. HMRC says you have three months from the date your registration window opens, and you can continue interacting with HMRC during that window and while HMRC considers your application.
See this week’s Compliance Corner below for the reader question on SDLT returns and the confusing HMRC checker.
SRA gains prescribed person status for whistleblowing
The SRA has been added to the list of prescribed persons under the Public Interest Disclosure Act.
In practical terms, this strengthens protections for people who work for, or with, SRA-regulated firms and who raise public-interest concerns with the regulator. The SRA says this includes employees, paralegals, clerks, trainees and agency workers.
Solicitors and firms already have professional duties to report serious regulatory issues, but this development is still important. It may give non-regulated colleagues more confidence to speak up where they reasonably believe something serious is wrong.
You might also like
Legal Futures has a useful piece on what solicitors should do if the SRA demands privileged client material while the High Court considers the issue. The headline advice from counsel is to ask for a delay. That is one to watch closely, because privilege remains one of the most sensitive areas in regulatory investigations.
Today’s Conveyancer has an interesting article on why smaller conveyancing firms may gain an unexpected edge from AI. The sensible point made is that firms should know what problem they are trying to solve before buying technology.
The Law Society Gazette reports that private equity appears to be looking beyond the top end of the legal market towards scalable legal practices. For anyone thinking about ABS structures, succession, acquisition or external investment, that is another sign that ownership models in the legal sector continue to shift.
RollOnFriday has covered the SRA’s appeal against the SDT sanction imposed on a solicitor found to have bullied, sexually harassed and humiliated junior female staff. The SDT imposed a 12-month suspension, suspended for two years, but the SRA says it will appeal on the basis that the sanction was insufficiently severe.
What to do this month
Prepare for the SRA AML and sanctions questionnaire
The SRA’s annual AML and sanctions data collection exercise is back.
The form opens on 29 June 2026 and that it will contact compliance officers with details. It will collect information on work in scope of the Money Laundering Regulations 2017, sanctions exposure, designated persons, and suspicious activity reports to the NCA. Firms can submit a nil return if they do no in-scope work.
Do not leave this to the last day, you can start preparing your responses now. Submissions must be completed online. The person submitting will need a mySRA account and must hold a relevant post or role in mySRA, such as COLP, COFA, MLRO, MLCO or authorised signatory.
What often takes longer than expected?
First, checking who actually has the right mySRA role. Secondly, getting the authenticator app set up. Thirdly, pulling together the data if your matter categories, AML risk data and SAR records do not align neatly with the questionnaire. The SRA says estimates can be used where exact figures are not available, but the submission should still be a best-efforts response, not guesswork.
Practical steps for the next couple of weeks:
- Check who received last year’s request and who will submit this year.
- Confirm your COLP/COFA/MLRO/MLCO/mySRA roles are up to date.
- Download the specimen questionnaire and start gathering the data.
- Identify whether your systems can answer the questions cleanly.
- Document any estimates and how you reached them.
- If you discover gaps, do not panic. Use the exercise as an internal risk review and record what you will improve.
Compliance Corner: Do conveyancers need to register with HMRC as tax advisers?
Q: We submit SDLT returns for conveyancing clients. HMRC guidance says that if you interact with HMRC about someone else’s tax affairs and get paid for it, HMRC considers you to be a tax adviser.
But the online checker asks whether the contact with HMRC is only to meet the legal requirements of the business or because HMRC has requested information. SDLT returns are filed because the law requires them, not because HMRC has requested information from the client.
When we answer that way, the checker says we do not need to apply. That seems to contradict the SRA/HMRC guidance. What should conveyancers do?
A: This is one of those situations where the generic wording and the conveyancing-specific answer do not sit neatly together.
The latest HMRC and Law Society material points in the same practical direction: if you are paid to submit SDLT returns or pay SDLT on behalf of clients, HMRC expects you to register as a tax adviser.
The confusing bit is the exception for interactions that are only because the law requires them. That may make sense in some sectors, but it is not a safe basis for ordinary conveyancing firms to assume they are out of scope where they file SDLT returns for clients.
So the answer is: if you file SDLT returns for clients as part of conveyancing work, plan on registering unless you have clear written confirmation from HMRC that your firm is outside scope.
This is not legal advice. If you have a question you would like us to answer in this section, feel free to send it to info@jblcompliance.com
Free CPD
SRA authorisations: the hard work starts before the forms
Last week’s webinar looked at SRA authorisations, including new firm applications, ABSs, compliance officer changes and ownership changes.
The main takeaway was that authorisation should not be treated as a form-filling exercise. The forms are only part of the process. The real work is identifying the regulatory trigger, mapping the people and ownership structure, spotting AML and PII issues, and presenting the SRA with a clear, coherent explanation of what is changing and why approval is needed.
Current authorisation delays remain a real frustration. Even simple applications can take longer than expected, while complex ABS or ownership structures can take several months. That makes early planning essential.
Some practical points from the session:
- A structure chart is often the best starting point, especially where there are corporate owners, holding companies, group structures or non-lawyer involvement.
- PII should be explored early, particularly for new firms or higher-risk work types.
- AML approvals, DBS checks and certificates of good standing can all add delay if they are not factored into the timetable.
- COLP and COFA changes need proper runway. Firms must have those roles covered at all times, and the emergency approval route is only for genuine emergencies.
- Ownership changes can be more complex than they look. The SRA may need to look up the ownership chain to identify who ultimately owns or controls the firm.
The overall message: involve compliance early, map the application properly, and make the authorisation officer’s job as easy as possible.
Watch the recording (available free for 30 days) – use password JBLAUTH
Next free webinar: What the SRA’s COLP, COFA and accountants’ report reforms mean for your firm
Date: Thursday 2 July 2026
Time: 12pm
Location: Online by Zoom
The SRA has now confirmed the next stage of its client money safeguard reforms. The practical consequences for firms could be significant.
In this session we will unpack:
- the new annual accountants’ report declaration requirement;
- what firms will need to submit and when;
- the new restrictions on who can be COLP and COFA;
- how the £600,000 turnover and £2m client money thresholds work;
- what owner-managed firms should be thinking about now;
- whether “separation of powers” will actually improve governance; and
- what firms should do before the rules come into force.
Invitations will be sent to clients next week. Places will be allocated on a first come, first served basis.
New JBL training resources
AML Building Blocks – half-day webinar now available in the LMS
Our AML Building Blocks half-day session is now available to take within the JBL Compliance LMS.
This is a practical, pre-recorded course for firms that want staff to understand how the main AML controls fit together: firm-wide risk assessment, policies and controls, client and matter risk assessment, CDD, source of funds, independent audit and training.
It is ideal for onboarding new team members, refreshing fee earner knowledge, or giving supervisors and compliance staff a structured overview of what how all the bits of AML compliance fit together.
Our most popular recent webinars are also available to LMS subscribers, alongside our more structured modular CPD compliance courses.
Contact us for a free trial.
Disciplinary watch
AML systems and controls
Rohan Solicitors LLP was rebuked after the SRA’s AML Proactive Supervision Team found that five out of six reviewed files did not contain documented client and matter risk assessments. The firm said it was assessing risk, but not formally documenting CMRAs at the time. It has since remediated the issue.
JC Solicitors Ltd was fined £5,418 after the SRA found failures on three out of six reviewed files to assess the purpose and intended nature of the business relationship. On one file the firm also failed to conduct adequate ongoing monitoring and source of funds checks.
Parnalls Solicitors Limited was fined £32,106 following an AML inspection. The SRA found weaknesses in source of funds checks on three files, missing CMRAs on four files, and failures to follow the firm’s own policies, controls and procedures. The firm had remediated and there was no finding of actual harm, but the penalty is another reminder that paper controls must be followed in practice.
Client money, undertakings and governance
Headleys was fined £750 for failing to promptly notify the SRA of a material change in relation to its COLP. Not the most dramatic case in the world, but a useful reminder that authorisation records must be kept up to date.
Siobu Brady was rebuked for a series of issues including failing to comply with an undertaking within a reasonable time, allowing post-completion/conveyancing work after PII had expired, accepting instructions during or after the firm’s cessation period, and failing to maintain proper accounting records.
Jeffrey Hazelgrove, a non-solicitor head of finance and operations and COFA, was made subject to a section 43 order after authorising or making transfers from client account to office account to meet firm liabilities where the transfers were not justified. The SRA found the conduct dishonest.
Aneil Naeem was rebuked after authorising or facilitating client damages payments to third parties without ensuring the client had given properly informed consent.
Evidence shortcuts and integrity
Korie Rose, a senior paralegal, was rebuked after copying a signed statement of truth from one version of a witness statement and pasting it onto another without the witness’s permission. The SRA did not make a dishonesty finding, but the conduct wasted court time and damaged public trust.
Raymond John McKeeve was suspended for two years by the SDT following the notorious “burn it” instruction. The tribunal found that he instructed a colleague to delete material from an encrypted messaging system after a search order had been made, conduct which had already led to a finding of criminal contempt.
What we do
- Outsourced COLP and COFA support
- Learning management system for multiple users
- Bespoke training – remote and in person
- Compliance audits
- New firm and ABS applications
- Independent AML audits
- AML and sanctions support
- SRA Accounts Rules and client money reviews
- File reviews
- SRA reports and notifications
- Escrow accounts for law firms
Contact us if you need help with any of the issues in this newsletter.
The Pinsent Masons AI case: supervision, shortcuts and professional responsibility
The recent Pinsent Masons judgment is a stark reminder that AI left to its own devices is a major compliance issue. A junior lawyer used AI to research a point of insolvency law, the output included invented statutory wording, and the error found its way into correspondence with the court. The court’s criticism did not stop with the junior lawyer: supervision, verification and candour all came under scrutiny.
The breakup clause: ending a retainer without creating a bigger problem
The SRA’s new guidance on terminating retainers is a useful reminder that ending a client relationship is not just a contractual issue. Firms need a good reason, reasonable notice and a proper record of the decision. The article looks at non-payment, difficult clients, abusive behaviour, conflicts, imminent hearings and the practical steps firms should take before telling a client they can no longer act.
The SRA and the profession: united we stand against AI complaints?
Eye-watering practising fee increases are on the cards – partly due to the volume of complaints being handled by the SRA. AI is likely to generate more complaints across the legal sector, but not every complaint about a law firm belongs with the SRA. This piece looks at the regulator’s challenge: separating serious professional issues from service complaints, tactical grievances and AI-assisted noise.
The music has stopped. Now the SRA is looking for a new chair
The SRA has begun the search for a new Board Chair, with Anna Bradley due to stand down after eight years. The official announcement is polite enough, but the profession’s mood is rather less forgiving. After Axiom Ince, SSB, PM Law, rising regulatory costs and the continuing debate about client money, the next Chair will inherit a regulator under real pressure to rebuild trust.
This is not just a change of personnel. It is a test of whether the SRA can listen better, spot risk earlier, act faster and show a bit more humility when things go wrong.
