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COLP Insider – 22nd November 2019

Anne Bode

SRA Standards and Regulations – in force from Monday

It’s finally here, launch day. Are you ready with your party poppers and fanfare?The new rules have been talked about ad nauseam over the last few months. Hopefully now we can shift our focus to some more pressing compliance and risk topics.

AML, particularly with the SRA’s renewed focus, and the 5th Money Laundering Directive almost upon us (January 2020), is the big topic for most law firms. Many are scrambling around to get their systems in place before the regulator comes knocking.

Brexit could still be an issue for many cross-border firms, or those who send or receive data from the EU.

Fraud and cybercrime targeting solicitors gets more sophisticated by the day.

And yet much of our attention has been focused on the SRA’s new rulebook.

We said it last time, but it’s worth repeating: Don’t panic

Yes, it is important that all regulated people are aware of the new rules. We need to do the training. (Reminder that all our retainer and ABS clients have access to the staff e-Learning module in your compliance portal).

And yes, there are some changes – some quite subtle and unintentional, others less so.

But the main theme of the new rules is evolution not revolution. Simplicity and flexibility over poorly drafted Outcomes and Indicative Behaviours. And taking the next logical step on the Principles Based Regulation journey.

The biggest changes in the rules are:

  • The radical new ways of practising outside of full regulation
  • A significant emphasis on ethics and individual accountability over ‘compliance’
  • Wonderfully accessible and sensibly-drafted Accounts Rules
The rest is mainly either subtle change in rules, or simply changes in format.

Even the regulator’s message has been that ‘compliance’ on 25th November will look the same as today. We shouldn’t need to be making wholesale changes to internal systems and processes.Instead, we need to increase our focus on:

  • Taking personal responsibility for our own ethical behaviour – both in and out of the workplace
  • Being less reliant on prescriptive rules, and being able to justify our decision making
  • Keeping records to demonstrate compliance
  • Understanding rules that apply to us – for example, the Accounts Rules (which are now accessible to all)
  • Reporting our concerns internally and – where necessary – externally
  • Understanding that supervisors carry a regulatory responsibility – they are accountable for the work of those they supervise
  • Minimising the risk of working with the ‘new breed’ of solicitor – the freelancers and those working for unregulated businesses.
  • Getting used to keeping a close eye on regulatory guidance.
As with all matters of regulation, if you can demonstrate that you are taking steps to engage with the rules, the likelihood of you being criticised is low. On the other hand, those who are unable or unwilling to take reasonable steps towards compliance are putting themselves at risk.

Access the e-Learning (clients only)

 

 

SRA Digital Badge – mandatory from Monday

 

Also on 25 November, the SRA Digital Badge, or ‘clickable logo’, becomes mandatory for all regulated law firms to display on their websites. If you haven’t done this yet, make sure you do. The SRA will be doing another sweep of website compliance before the end of the year.

Is the Digital Badge GDPR compliant…?

The SRA came under fire recently by risking the unlawful processing of personal data via the SRA digital badge. It has been reported that the software used by the SRA has the ability to track website visitors and and target them with advertising.

The regulator has now confirmed that these concerns has prompted them to turn off the Google analytics integration “at the moment”.

Latest cybercrime attacks

As we highlighted in the last edition of COLP Insider, one of the SRA’s key risks in their recent Risk Outlook is cybercrime. The need to be ever vigilant is not going away any time soon. Cybercrime and fraud is an increasing risk and law firms are in the firing line.
Just think of the amount, and sensitivity, of personal information processed by lawyers. Individual’s identity documents, bank account details, medical records, criminal history, and so on.

Equally attractive to cyber criminals and agents of espionage are transaction projects, intellectual property, and the legal affairs of corporates.

To underline the point, the SRA keeps a running log of attacks and attempted frauds. We suspect these are the tip of the iceberg:

Legal Ombudsman drops mediation scheme

A pilot for a new mediation scheme run by the Legal Ombudsman has been scrapped. The idea was for more cases to settle before investigation, thereby reducing overall demand on the Ombudsman.

Unfortunately, there was lack of appetite from both law firms and complainants, resulting in a success rate of just 4 per cent.

ICO provides new guidance on ‘special categories’ of personal data

The Information Commissioner’s Office has published detailed new guidance to address ‘special category data’. The regulator expects those responsible for data protection to take extra precautions to protect this sensitive information from falling into the public domain.

Special category data includes the following information relating to an individual:

  • health
  • sex life or their sexual orientation;
  • racial or ethnic origin;
  • political opinions;
  • religious or philosophical beliefs; or
  • membership to a trade union.
The guidance reiterates the importance of establishing a lawful basis to process personal data, together with the requirement to have adequate measures and policies in place.

 

 

Practice notes and guidance

 

 

Disciplinary decisions

  • Waheed Rahman suspended for inflating his hourly rate tenfold as a transaction ran into difficulty.
  • Ian Burleton – non-lawyer working in the finance section of a City practice – convicted for diverting £32,000 intended to pay suppliers to his own account.

 

 

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