The Law Society of England and Wales has responded to the Solicitors Regulation Authority's (SRA) consultation on its business plan and budget for 2024-2025.
The SRA says its business objective is “to enhance trust and confidence in legal services”. Its business plan, which comes into force in 2023 and runs until 2026, outlines key priorities for the regulator, including issues around diversity and inclusion. The SRA says it will “investigate and address persistent EDI issues, including professional testing and enforcement activity”. The SRA has committed to “proceeding with plans to introduce an EDI assessment framework”.
Regulators said they would improve enforcement methods, which could include “financial penalties.”
The SRA also said it would respond to guidance from the Legal Services Board (LSB) on new regulatory objectives to promote the prevention and detection of economic crime, as well as changes to money laundering regulations.
Diversity and inclusion priorities include offering the Solicitor Qualifying Examination (SQE) in Welsh from early 2025, and implementing the SQE as a three-year assessment.
The issue of anti-money laundering will be extended to consideration of the outcome of HM Treasury's current consultation on the future of anti-money laundering oversight.
Other key priorities outlined by the SRA include: “Our work in this second strategic priority area is focused on delivering better regulation by taking proactive, risk-based actions, and basing decisions on action on the best available data and reliable information.”
“The legal services sector, and the people and businesses who operate within it, are constantly evolving. Proactive regulation allows us to keep up and deliver our regulatory response in the most effective way, to protect the public from ever-changing risks and proactively fulfil the regulatory objectives of the Legal Services Act and the other obligations imposed on us.”
Responding to a consultation launched in May, the Law Society welcomes the continued focus on equality, diversity and inclusion (EDI), anti-money laundering (AML) and technology and innovation.
Nick Emerson, president of the Law Society, said: “As a general principle, we strongly encourage the SRA to focus on its core activities and only undertake additional work based on evidence of regulatory need or specific gaps in meeting consumer needs.”
“The SRA’s continued focus on the areas outlined in its business plan is in line with our own priorities.
“The SRA is continually improving its collection of diversity data, which will inform concrete and meaningful action to bring about positive change in EDI, particularly to address persistent EDI issues in professional examinations and the SRA’s enforcement activities.”
“We are also pleased that the SRA continues to encourage diversity in senior management roles at law firms and look forward to understanding what activities and regulatory tools it will use to support this, as well as how it will work with other stakeholders.”
On AML, Nick Emerson added: “The legal industry is fully committed to combating illicit funds and money laundering, which is demonstrated by the significant resources allocated to complying with AML and financial crime obligations, resulting in significant public interest.”
“Whatever options HM Treasury pursues regarding the future of AML supervision, the Law Society’s expertise and engagement will be vital as we continue to work with the SRA to draft guidance for the legal sector that is in line with the updated money laundering regulations.”
“This is even more important given that laws are constantly changing and regulatory requirements continue to rapidly evolve and expand.”
Speaking about technology and innovation, Nick Emerson concluded: “We will continue to support the SRA's collaboration with SMEs to help them adopt the right technology to enhance their ability to meet consumer needs.”
“Our members have expressed concerns about trying to keep up with the rapid pace of technological innovation, given the associated financial and resource costs.
“There are concerns about how law firms, particularly small and medium-sized enterprises, can meet their regulatory obligations and professional standards and enhance consumers' ability to engage with and access legal services.”
“Support should include information in plain English on how to procure the technologies, as well as the capabilities, limitations, risks and benefits of each technology.
“As with SMEs in other sectors, incentive packages and investment support for the introduction of new technologies will be a key driver of adoption and transformation.”
