Monthly Archives: March 2012

SRA releases advice on recruiting COLPs and COFAs

Outcomes-focused regulation (OFR) has been a reality for five months. And one of the key requirements for authorised firms is to nominate their Compliance Officers for Legal Practice (COLPs) and Compliance Offices for Finance and Administration (COFAs).

The?SRA?is extending the date for nominating?COLPs?and?COFAs?from 31 March, in order to give firms more time to finalise their nominations to the?SRA, and to allow for further checks on the application process. An online nomination form is expected to go live in the next six weeks.

As soon as the date is finalised, the?SRA?will be writing to all firms providing further advice and information, including timescales for nominations and details of the data required for the online process. It is still the?SRA?s intention to make approval decisions on all nominations by the original date of 31 October, when?COLPs?and?COFAs?must start fulfilling their duties.

In the meantime, the?SRA?is providing the advice below on what it will be looking for in nominations.

Richard Collins,?SRA?Executive, said: ?We regret we have been unable to provide the online form as early as anticipated, but it is important that rigorous testing takes place before it enters the live environment. In addition we recognise that, for many firms, the annual renewal process has run later than originally planned. We hope firms will be able to use this extra time to ensure they have identified the best nominees for the roles and, therefore, it may be helpful to remind firms of some of the key issues they should consider in this process.

?COLPs?and?COFAs?are responsible for ensuring their practice has systems and controls in place to enable the firm – as well as its managers and employees – to comply with regulatory requirements. It is essential that?COLPs?and?COFAs?have sufficient ability and authority to fulfil these important roles, including having access to management systems and all other relevant information, such as client files and business information.

?The online nomination process for Compliance Officers will allow us to consider the relevant information to verify that the nominated individual can properly discharge the responsibilities of the role as defined under Rule 8.5 of the Authorisation Rules. As well as completing the Suitability Test, applicants will need to satisfy the rules and role requirements, including demonstrating that they are ‘of sufficient seniority and in a position of sufficient responsibility to fulfil the role’. This will include consideration of governance arrangements.?

The table provides advance notice of the key information required during the nomination process. Some aspects of the form will be pre-populated by the?SRA?s computer systems and firms will need to verify or amend sections as appropriate.

Details of the firm making the Nomination
  • ? Firm?Name
  • ? Registered/Head?Office address
  • ? A?copy of the firm?s organisation structure
  • ? A?copy of the firm?s governance structure showing the position of the compliance officers
  • ? Information about the numbers of legally qualified personnel, fee earners and the types?of legal services offered by the firm
  • ? Detail?of the Compliance Officer role within the firm (this may be supported by a?job description/role profile document) eg whether they are part-time or?full-time employee, other employers they have if?this is applicable, whether?the role is a full-time or part-time role within the firm or if they carry?out other roles within the firm
Personal ? details of the Compliance Officer candidates
  • ? Candidate’s?name
  • ? Address?history for five years
  • ? Work history for five years
  • ? Professional details
  • ? Professional?interests eg other business links or separate businesses
  • ? Role?within the firm
  • ? Suitability?Test (see?SRA?Suitability Test 2011)

COFAs?should have access to all accounting records and will carry out regular checks on accounting systems as well as conducting file and ledger reviews. They should ensure that breaches of the?SRA?Accounts Rules are remedied promptly and reported to the?SRA.

Additionally, they need to monitor, review and manage risks to compliance with the?SRA?Accounts Rules. If either a?COLP?or aCOFA?identifies a compliance failure, they must report it. In deciding whether to report it immediately or in the annual report, they must take account of the damage – or potential damage – to clients as well as the risk of loss of confidence in the firm. The scale of the issue and its overall impact on the firm and its clients are also key factors.?COLPS?and?COFAs?will be required to keep appropriate records of failures in compliance.

Richard Collins concluded: “It is important to remember that the existence of?COLPs?and?COFAs?does not absolve the firm and its managers from any of their own obligations.”

A webinar will be held in the spring to help with the application process. Details will be advertised on the?SRA?website.

Further information on compliance responsibilities.

All roads lead to file reviews

File and ledger reviews now have an increased significance as a vital compliance tool. They can be used to gauge the quality of work produced by all fee earners as required by Outcome (7.8).

[col1]Indicative Behaviour (10.1) talks about ?actively monitoring your achievement of the outcomes in order to improve standards and identify non-achievement of the outcomes?. File reviews play an important part in achieving this (along with other measures, such as obtaining client feed-back).

File reviews will also be an effective mechanism for identifying breaches which the COLP and COFA are responsible for reporting to the SRA (material breaches ? as soon as possible, non-material breaches as part of the annual information report).[/col1]

[col2]Have you considered out-sourcing your file reviews? We undertake a comprehensive and flexible file review service to fit your requirements.

Contact us for more information.[/col2]