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COLP Insider – 4th May 2018

Anne Bode

It’s time for your regular compliance news update!

May is no doubt going to be all about data protection of course. Are you GDPR-ready yet? Believe it or not, there is still time, and the ICO is telling small businesses not to panic. The world will not collapse on 26 May. From the ICO’s most recent newsletter (subscribe, it’s good):

 

In this issue we look at one of the many GDPR headaches (classification of data processor/controller), an interesting use of the new SRA waiver regime, and news of a reduction in accountant reports.

If you do need a little pragmatic guidance on the practicalities of GDPR for your firm, please do get in touch.

Until next time

Jon and the team

 

 

Barristers advised not to sign data contracts with law firms

The Bar has advised self-employed barristers not to sign contracts with law firms endeavouring to comply with the forthcoming GDPR and in particular Article 28. Such contracts would assume that the solicitors are “data controllers” and that barristers are “data processors” and bind them to protect the data rights of clients.

This contention is deeply disputed by the Bar Council in the advice drawn up by its information technology panel. It maintains that barristers provide “independent, objective, specialist advice” and determine what information and data to obtain to perform their duties. They are not sub-contractors of solicitors. One exception may be where barristers are on secondments to law firms and may then be properly be considered to be “data processors”.

Why it matters

One of the core aims of the GDPR is to regulate the flow of data between data controllers and data processors therefore determining which group you fall into is key when interpreting the regulations at the outset. Increasing clarification and guidance on specific GDPR points are emerging from regulatory bodies as the implementation date looms.

We’ve also heard lots of stories of estate agents and other referrers attempting to get solicitors to act as data processors. In the normal course of business, of course, the solicitor would be a data controller. In other words, no you cannot come and audit our files…

 

 

HR firm is first unregulated firm to employ solicitors

The SRA has issued a waiver which enables a HR firm, Croner, to employ solicitors to advise its clients. In doing so, it becomes the first unregulated business to employ practising solicitors. The business currently employs the services of a number of solicitors to advise on their helpline and attend employment tribunals. Whereas previously they had to appear in any tribunal as “consultants” and unable to hold themselves out as solicitors, they may now use their professional title.

The waiver also enables the solicitors to provide written advice and for the firm to offer training contracts.

In order to be granted the waiver it Croner had to satisfy stringent SRA conditions that its plan was compatible with regulatory objectives, protecting and promoting the public interest and improving access to justice.

Why it matters

Until the upcoming changes to the Practice Framework Rules come into effect, solicitors cannot be employed in any unregulated business to provide any legal advice – even in “unreserved” matters, such as employment law.

The recent move to simplify the SRA’s system for granting waivers forms part of the “SRA Innovate” initiative, which aims to promote innovation and allow firms to push the boundaries of current rules within a safe ‘innovation space’. This is a good example of the initiative in practice.

It very much fits with our current theory – if you can think of a business model, there is probably a way to do it without breaking the rules.

 

 

Relaxed reporting rules welcomed by firms

The SRA has revealed a significant drop of 28% in reports submitted by accountants in the past year following a downward trend since the relaxation of its reporting rules.

Mandatory reporting was relaxed in 2015. Instead, firms should only file qualified accountants reports to the SRA in relation to Accounts Rules breaches which were either intentional or where client monies were put at risk.

Hazelwoods, the accountancy firm behind the research, praised the SRA for the change in approach and highlighted that this freed up time for the SRA to actively follow potential problems with firms and ensure that they were rectified.

This does not however mean that the SRA are going soft on the profession. Risks to client money are still treated extremely seriously, and the SDT continues to hand out fines and strike-offs for Accounts Rules breaches.

Why it matters

The relaxation of the reporting rules seems pretty sensible. Why should the regulator sift through thousands of accountants reports unnecessarily. The current system should make it easier for the SRA to spot the real problem areas, in theory at least.

However, we have seem evidence of accountants still qualifying reports for minor breaches. Which suggests that they may not be fully up to speed with the professional discretion they are supposed to apply. It might be worth flagging up the SRA’s guidance at audit time.

 

 

New and updated Law Society Practice Notes and Guidance

 

 

Disciplinary decisions