OK. Hello everybody. My name is Katie. I'm going to be uh presenting today's webinar. So today's session is about SR A supervision. Um And we're specifically looking at uh the supervision of the regulator related to both individuals and firms in today's session. And we're thinking about what kind of things can the supervisors as the regulator do in respect of that? And what kind of tools and techniques do they use to supervise? So my background in dealing with this, I'm a, a regulatory compliance consultant, but I used to work for them R A uh and including as part of their supervision function. And um so I'm here today to really talk you through some of the different things that they might do and some of the decision making that they might make. And this is really helpful. Um if you receive any correspondence from the SR A and you're not sure what to do in respect of that. OK. So let's move on to the next slide. Let's have a look at what we're going to cover in today's session. We're going to have a think about the question, what do we mean by regulatory supervision So, um we're going to have a think about um understanding the concept of supervision and we're going to think about what does the regulator mean by supervision. How do they think about managing all of those regulated firms that they have and all of those regulated individuals? And what tools and techniques can they have to we use with firms and we're going to have a look at some of those different tools. So for example, thematic review, which is where they send correspondence out to lots of firms. So they do that on asking to see, for example, people's anti money laundering risk assessment or they've done that where they introduce the transparency rules and then they ask people to send information back to them to confirm that they're compliant with the transparency rules that they have all of this information on their website. And they do them every once in a while to have a look at issues that are prevalent throughout the market and where they need to make sure that they're taking action as a regulator. They can also do desk based supervision, which is where they send correspondence out to firms. And they can also do on site visits as well, go and talk to people and sometimes these things can be more formal as well. So more formal attitude is a lot around that final one that we've got raising an allegation. So when we're thinking about, will this go into enforcement action or do we need to present this as initial procedural fairness to the firm raising an allegation is the, the thing that sometimes the sr A supervisors will do. So we're going to have a look at a range of these thematic uh and supervisory tools that the SR A have and how they might use those. And we're also going to explore the legislative position that sits underneath this as well by looking at some of those key legislative provisions that allow the SR A to do these things. And then we're going to have a look and ask ourselves, well, what can the firm do in this situation? What kind of steps should they be taking if they're receiving such correspondence from the SR A and how can they tackle that effectively and demonstrate both their compliance and also effective management in dealing with the situation? Sometimes it's so alien to people to receive this as a business because they're not the regulator that haven't understood the regulator's perspective, they can get a bit confused or overwhelmed with what they should be doing. So as a result of that helping just providing some thoughts and ideas for what people can do to demonstrate that effective management, um overall. So let's move on then to having a look at this um uh discussion of regulatory supervision and what I want to do in the beginning is just to have a think about um individual uh firm regulatory supervision and by that, I mean supervision of the individual firm. So we're thinking about the firm overall and you might say if you're a regulatory supervisor, you will have a range of different issues to tackle in a range of different firms. And so each firm needs sometimes a bespoke response. Ok. So we can see on this diagram here, we've got firm A and firm A has a lot of complaints uh against it. Uh Then we've got Firm B. Firm B is in financial trouble, ok, possible insolvency. And then we've got firm B uh, they've had a lot of misconduct allegations. So, uh rather than consumer complaints, allegations of breaches of the rules which is different, sometimes a complaint doesn't necessarily present an issue of breach of the rules and vice versa. Uh Some misconduct allegations against firm C and then Firm D has another regulator, different regulator. So we might say, for example, the IC O, for example, they may be involved in firm D uh and working with them and the so A are notified of that. So another regulator's involved and the regulatory supervisor might be responsible for all of these different firms, but each of these different firms has a very, very different uh problems that is facing and the regulatory supervisor has to think to themselves. Well, hang on a second. What am I going to do in respect of all of these firms? The decision making needs to be. What should I do to get the right outcome with each of these firms. And the regulatory supervisor is going to have to take a different bespoke action to uh deal with the situation in each of these firms. Ok. So you can't take the same action to deal with this situation in each firm. Firm A needs a different response to firm B. Firm C needs a different response to firm D and you know, going all the way through each firm needs their own individual response. But that one regulatory supervisor or one team and regulatory supervisors might be responsible for dealing with all of these issues. So the exercise that we can undertake and you can take this away and have a look at this in your own time if you want to after today's session is what actions would you think a regulatory supervisor could undertake in respect of these types of issues? Ok. And you can just take five minutes to have a think about this if you want to and just say, well, what would you do if you had a lot of complaints? Would you write to the firm? Would you go and see them? What about if it was possible insolvency, how would you deal with that situation? The sr A in those circumstances might be, for example, working with external accountants, the law firm might be, you might be you with lots of parties. What about firm D where you've got another regulator involved? How could you deal with that situation? Would you need to go direct to the other regulator? So there's lots of different types of actions that the regulator can take and those activities can be different for each firm. So where you've got issues being raised or that the regulator is aware of the regulator needs to take steps in order to supervise them. So this is what I mean by it, it's an individual response, individual firm regulatory supervision so that so a is proactively taking steps to work with those firms or to try to solve problems based on the consumer and wider public interest. Now, let's move on to contrasting that with group or issue regulator supervision, group or issue regulatory supervision is where there's one issue across the market that needs to be dealt with. So in the regulated community, there might be an issue, for example, to make sure that compliance is being achieved and the transparency rule been introduced and then the sr a checking on that is a really good example. So they weren't around and they had to look at people's websites and they said is everybody complying with this and they sent out some letters to ask for people's detailed responses to whether they were complying or not. But these were standard letters across the board and a regulate one regulatory supervisor or one team of those might be responsible for sending those letters out to lots and lots and lots of different firms, but it would be the same letter, same standard letter in each case. So you've got the, so a there decides to conduct its thematic review across the market or even across the section of the market. It might be and that gets allocated down to regulate your supervisor with one standard letter and that standard letter gets sent out to all of those firms. So you can see there, we've got firm X firm T, firm S and from L and they've all got the same issue, ok? They're all going to be in the position of discussing whether compliance is being achieved in relation to the transparency rules. So we can contrast that with what happened on the previous slide where there was a bespoke response to each firm, not all the same response can be had. Whereas in this case, there is a different uh yeah, sorry. There is the same uh situation with all firms and they're all going to receive that same standard letter from the regulatory supervisor. So you've got group or issue supervision being contrasted with an individual decision making or management for more serious or more detailed issues that need to be discussed. Ok. So let's have a think about sr a regulatory functions as a whole and how supervision differs from some of these other functions. So we're talking about that sort of uh when we're talking about supervision, we're saying that people are regulated. So both individuals and firms and that the SR A needs to keep an oversight of those people that are regulated. It needs to think about the ways in which they're behaving once they are regulated and making sure that the SR A are proactively writing to them and contacting them and seeing them to make sure that they're real to make sure that they are, um, you know, having regular contact with their regulator and make sure that they're operating appropriately. But there's also other regulatory functions that the SR A perform as well. Supervision assumes that the regulated uh community is, you know, uh already regulated, it already achieved qualification status. For example, it's got their practicing certificates, got their firm authorizations, all of those sorts of things are already in place. So supervision assumes all of those things and then keeps their eye on that community as a whole and make sure and see is there anything happening and when it does happen, which it does things do happen, complaints are made different things happen to law firms, then the supervisor has to take action in respect of those. So we can contrast that with the other functions that the SR A has. Um and there's a wide variety of functions internally that the SR A has including things like communications, for example, policy, legal departments, lots of different departments, but their core regulatory functions can be divided into three and we can see them on the slide here. We've got authorization, supervision and enforcement. And if you imagine the life cycle of a firm, you can see how those functions work. So a firm might, first of all be authorized. So somebody new decides to set up their own firm and they apply to do that. They come in and they first deal with the authorization function. Then over time, the sr a would supervise that function. So they keep an eye on it. Ok. They make sure that that firm was doing what they said they were and they would monitor any correspondence they received about that firm, contact the firm if they needed to and sometimes the firm might be involved in that kind of thematic review. Have you done these things that we're asking you to, can you write back and confirm them to us if there was any need for any concern in respect of that firm that had been set up, the SR A could take enforcement action. So that's the third step. And that's really where they think about uh rebukes fines, adjudications and issues that get referred to the SDT. So both internal sanctions and also external sanctions as well. So you've got those three key functions and under authorization. That's new firms annual practicing certificate renewal, having your first practicing certificate, approving persons such as cops, coffers, uh money laundering reporting officers, A BS, external investments and approving those as well. And also authorization also includes exit as well. So firms that are closing down. So it's really just saying are you approved by the SL A or not that function? Then the second function we've got there is sr a supervision which is what we're dealing with. Now, management of regulatory issues, visits raising allegations, which we're going to talk about later, which is a step towards discussing whether there needs to be enforcement action and also undertaking some investigation. So monitoring people and taking action when we need to and then you've got enforcement which is uh again allegations. So there's some overlap between the functions at any internal adjudications, issuing things like rebukes. And we've got now fines as well being introduced, referrals to the tribunal, uh interventions and then you've got issues they might be pursuing at the tribunal. So it just strike offs or suspensions. Now, within all of that under the supervision and between the supervision and enforcement section there, you've got forensic investigation and that's a particular unit that sort of sits in between the two functions and provides a real indication of that overlap. And forensic investigation is the inspection of a practice's books of accounts where they're concerned uh where the regulator is concerned. For example, if they've received information, for example, from the police or other intelligence that there's been a concern about the client money being held or how the practices, books of accounts are operating. And that might be a concern, for example, that somebody's run off with the client account, somebody's misappropriated client money within the firm. So you can be then subject to a forensic investigation and that leans more heavily into a tendency towards uh enforcement action. So that's how the sr a sets out its uh regulatory functions. So let's move on to having a look at some different types of regulatory supervision tools. And you remember we talked at the beginning of the session about how different firms might have a different bespoke response depending on what type of um uh action had happened. So, or what type of issue had been raised. So they might have, for example, a lot of complaints or we had one that had an insolvency issue, we had one that had liaison and involvement of a different regulator. We've got both formal supervision tools which you know, tend towards more enforcement action, but you've also got a set of informal supervision tools as well. So um informal supervision tools include uh the type of uh letter that we might see on a thematic review. So writing out to a firm without raising any allegations, just asking for information or asking for some form of assurance or confirmation. Um and that might be, for example, saying, can you please confirm to us that you're in compliance with the following? Thank you very much and please send us some evidence. So not suggesting that they're not just asking for that confirmation, you might have an informal on site visit and that might be quite a friendly visit just to visit and say hello, how are you? Uh, we'd like to come out and see firms at random in some instances and just talk through things, uh, relating to, uh, compliance with the rules. And also while we're here, we'd like to address, for example, that you've got a number of complaints outstanding. And how are you getting on with managing those you might find in those circumstances, the regulatory supervisor keen to try to improve compliance and ensure compliance and make sure as part of the regulatory remit that consumers are being served. So that might involve um suggesting improvements and working with the firm on policies and procedures. So to say to the firm, look, we'd like you to make some improvements in these particular areas where we've received some concerns. Um not too serious, but we would like you to make some improvements. In some cases, you might see the regulator working with third parties and external experts and the position relating to possible insolvency. There was a good example of that where it might involve insolvency, practitioners advice from or working with a firm or also external accountants. And then also where you might see issues resolved is a good example, is working across with other regulators and even law enforcement where a firm does not need to, for example, work with all of these uh bodies externally and keep providing that information on a regular basis. And actually it might be another body that most appropriate to deal with it. The IC O is a good example, Leo is a good example, the legal ombudsman. So where there can be that informal discussion between different regulators and movement to say, actually, we think the firm's got a handle on this. It might be something that the sr a records that that's the case and they've still kept an eye on the firm overall and they've still sort of had an eye to whether or not they need to do anything and still understand what's also happening in that firm at the time. So they're still keeping an eye on it as a, as a regulatory supervisor. More formal regulatory supervision tools include writing to the firm formally and raising an allegation in writing to say, for example, it's alleged that you've done this, we've had some correspondence, we've had some intelligence that suggests that you've done this. Can you please formally comment on this and we'll consider whether to take any further enforcement action or not. Now, that's a formal process and it's given by the Sr A's regulatory um and disciplinary rules 2019, which form part of the standards and regulations. And we're going to talk about that more later in this session. Um We're also uh could see the SR a conducting a formal inspection. So um that formal inspection um could be uh for example, um looking at some specific issues. So if you had uh a lot of complaints in a particular area, they might come in and conduct a formal investigation in relation to that, to decide whether or not they want to raise an allegation in respect of that, to look more deeply at some of the root causes of some of those individual problems bearing in mind that the so a has to keep an eye as I, as I've said, and has to take then action where it thinks appropriate um within its regulated community to have a look and see what's happening in respect of that if you get very formal. So we were talking about forensic investigation, you can get an inspection of the practice bank accounts. And as I said, this is this overlap between the forensic investigation and then also that supervisory action as well. Uh practices can sometimes be required to uh have additional accountants reports. They can also be required to have additional support going into the firm as well. And to demonstrate that in a variety of different ways, sometimes when we're talking about additional accountants reports, that might be six monthly bank account, uh accountants reports, for example, and that is really to support the firm while they're looking and making sure improvements are, are put forward within their compliance with the accounts. You can also see the sr a imposing practicing certificate conditions and those practicing certificate conditions can be used to manage uh situations where the sr a particularly thinks that there is an issue within the firm that needs dealing with that would result in better compliance or operate in the public interest. Um Now we have done separate webinars for data law relating to so a authorization which deal with practice certificate conditions and also in relation to interventions as well. And there are links attached to the notes um that accompanied today session. And then at the end towards the end of those notes, for you to have a look at those webinars if you want. But there's one relating to sr a authorizations which covers the subject to practicing certificate conditions. And then there's another one, another few that we've done over the last year or two relating to interventions as well. Now, when we're talking about practicing certificate conditions, an issue that can be dealt with, for example, might be um restricting action, uh somebody's access to the financial functions of the firm. So for example, if one partner has not been compliant with the councils needs to have some additional training, they might have conditions placed on them to undertake further training in respect of that, like restrict access to the financial functions of the firm. Or if another person has particularly not performed well in ensuring compliance of the firm and has led the firm into noncompliance situations, they could find themselves restricted as to uh their access to functions such as coal or coffer in order to allow somebody else to take over and make improvements within the firm overall. So there can be proactive management decisions made by the sr A to say if we undertake this action in the public interest that should result in better outcomes, more compliant outcomes overall. So practicing certificate conditions can really be used to manage and monitor the situation on a year to year basis. Bearing in mind that the practicing certificate is renewed on an annual basis. Making intervention pre intervention arrangements is another supervisory function that's quite important. So we've done, as I said, a number of other webinars relating to interventions over the last year or so with data law and uh making those pre intervention arrangements is important in circumstances where for example, a sole practitioner dies or um somebody loses capacity, that's a sole practitioner in circumstances where the sr a can perhaps see an intervention coming and those are some uh some of those types of circumstances. A supervisor may be working with the remnants of the firm to try to close that down and reallocate that out to other firms. Now, where you've got formal regul uh supervision tools, these relate quite strongly across in some instances into regulatory enforcement and where we're talking about issues such as allegations being raised. You can then find yourself further down the line uh before an adjudicator having a fine imposed. Uh even if the allegations are serious. For example, ones of dishonesty where you know, there can be referrals across then to the tribunal. Uh real strong overlaps into regulatory enforcement depending on the case. Um, sort of put forward. So not to be underestimated. And we're going to talk more about the difference between the standard correspondence from a supervisor and formal correspondence from the supervisor as we carry on. But just to bear in mind there is that natural relationship. If they've started an investigation at the sharp end of the stick, if you like within supervision, um, and raised an allegation, we're gonna talk more as we go through the session about what an allegation looks like depending on the outcome of that. So the response from the firm, the seriousness of the issue and the impact or potential impact on persons, there can be um enforcement action taken then against the individual or the firm. So receiving correspondence, particularly where there's an allegation raised is quite, can be quite a serious issue and people should take advice as necessary. But as I say, we're going to talk more about that as we carry on through the session. Let's first before we get on to a discussion of allegations. And also we're going to just have a look at some different discussion around some of the terms of death based supervision and um uh on site supervision and just have a look at some uh process charts there before we get there. Let's have a look at some of the key legislative basis around supervision that sits and, and underlies the Sras approach overall. And also within that, we can see how the SR A are exploring some of those issues within their handbook overall as well. So, um, usually what you would find when you discuss any legislative basis for the SR A at all is that there's four main acts. Ok. So there's the Solicitors Act, 1974 there's a Legal Service Act 2007. But you've also got the Administration of Justice Act uh 1985 and the Courts and Legal Services Act 90. Now, we're just going to focus on the first two that I discussed there because we're just talking about the key legislative basis. And actually those latter two acts are uh you know, have some uh smaller points that uh that they raise there. So we're, we're going to focus on these first two. There just a key legislative basis for, for the SR A. Now the Solicitors Act 1974 is a really important act when we talk about the supervision of individual solicitors and how individual solicitors can be managed. Uh When we're talking about practicing certificate, conditions, some of the key powers include under section 10 to issue uh practicing certificate with conditions. Um and that means to issue a new one. So a new one for the forthcoming year might be or the first ever one that's been issued can be issued with conditions so it could be issued at the point of renewal with a new condition imposed on it. Section 13 A allows the imposition of PC conditions. So practicing certificate conditions while the practicing certificate is enforced. So at any time during the year, so it allows the sr a to impose conditions either at the point of renewal. So in October of the year or at the point at which it is enforced and operating during the practicing uh year now, uh renewal is the authorization function. And we talked about the difference between authorization and supervision. But any time a regulatory supervisor who's keeping an eye on things can make a decision to impose a practicing certificate condition. And the SR A has its own um rules relating to this which we're going to discuss in a couple of slides time that sort of sit above that and discuss how it's going to do that. Then General supervision power is also contained within section 31 of the Solicitors Act 1974. And that is to make rules regarding professional conduct investigation and also uh refer to the tribunal. But beyond that, uh within that section as well, uh The so a is empowered to take action to find out um whether the rules are being complied with. And this, this action that I'm sort of motioning here with people, sort of uh looking and seeing what's happening out there and going and writing those letters out to people and asking for that correspondence. Back in under section 31 of the Solicitors Act 1974 has the power to take that to go out and have a look and even to go in and visit firms to find out whether those rules are being complied with and to ask to see documentation, to ask to see uh different things like that. Now there are more formal inspection powers so you can make these requests, for example, to find out, you know, are are you compliant with our rules and if people sort of hold back those documents, for example, um then there's more formal powers that it can't exercise under. Section 33 A has the power to formally inspect practice bank accounts for compliance with the accounts rules. Section 35 gives it the powers that relate to interventions. And as I've said, uh and that's also contained within schedule one to to this uh this act as well. And um as I've said, there are separate webinars that we've done in relation to that and there's a list of those within your notes with uh hopefully links attached to those as well for you to go away and have a look we've done with data law over the last year. And then uh section 44 C gives the sr a the power to charge for its investigation. So once it started that process of raising that allegation, it gives it the power to charge for that investigation that formal uh discussion with somebody as to compliance with the rules. And then this is an interesting power that it has and to section 44 B or B A or BB to require documents and explanations from a solicitor or other person. So to formally say you must produce these documents on these days uh to us here at the SR A or to an, an address that it, it requires. And that is a formal order that it's making in that respect. So again, gives it that power to then compel somebody to provide those documents or explanations, not just the solicitor, but can also be a third party as well. So if we move on then to the Legal Services Act 2007. And as I said, these are just the two first two acts that I mentioned. Uh but there are further powers in the, the other acts, but these are really just a key legislative basis. Uh Section one provides the regulatory objectives for all of the regulators in the legal services market, including the SR A and that places a specific duty on the SR A to uh both require and uh you know, promote and monitor the uh compliance with its uh principles, but also to um uh look and put uh the consumer um interest at the, at the heart of what they're doing as well. And then uh section uh 21 the uh regulatory um arrangements. So that's the standards and regulations and those rules of professional conduct are formally recognized um under that section uh by the uh by the oversight regulator that sits there known as their regulatory arrangements. And so that's the full basis of the arrangements that they put in place, including those regulatory and disciplinary rules. Specific powers relating to A BS include requesting information or documents from uh an alternative business structure um relating particularly to the terms of the body's license. And this is, you know, the, the terms of that license will require that body to, to uh comply with the standards and regulations as well. And then Leo has the power also to uh direct uh the SR A and to send information across to the SR A when it relates to issues of misconduct. So where we're talking about that discussion and overlap uh and that requirement for supervision there, Leo and the receipt of those complaints can er can push those issues forward. Now, let's move on to them saying, well, where is this honored by the SR A within their uh uh standards and regulations? And how can we see this translated across into what they're doing? We've got a range of um uh positions within the standards and regulations that relate to the professional conduct of the individual and that require the individual to then comply with those rules. So once you get past that herd, a lot of authorizations and you're into supervision, then the firm is then required to comply and required to comply with the Sras principles, codes of conduct for firm or individual, the Sras accounts overseas and cross border rules and also financial services. So scope and conduct of business rules. I know. So the transparency rules as well. So there's a range of different rules there that are required to be adhered to and that the, so a are then supervising for compliance with overall, as well as discussions with other regulators that are required. So for example, the IC O and also LEO and also making sure that uh individuals aren't, for example, and firms aren't, for example, committing criminal offenses. There's a range of um er positions there that the, the firm have to comply with and think about compliance with and we can see that as part and parcel of supervision, we can however, make a distinction between that and within the standards and regulations. Further sets of internal rules that set out how the SR A will supervise or how it will behave in certain formal situations. You've got a range of other rules that go beyond uh the rules of professional conduct and that then say that the SR A has to behave in a particular way. Um So we have the regulatory and disciplinary rules which set out when the SR A will conduct an investigation or raise an allegation with the firm. You've got the authorization of firms rules which talk about whether conditions can be placed on a firm. And then you've got the authorization of individuals regulations which discuss the circumstances in which the SR A will impose conditions on a practice certificate. Now, all of the sets of rules that I've listed um here all govern the way the SR A has to behave in these circumstances that they also, there are certain things that the SR A has to do. For example, give people the opportunity to respond. It has to take into account that explanation. It has to think about whether or not it's in the public interest, for example, to impose er a practice of uh condition. However, these are all very uh formal powers that the SR A has and we've seen that there are a range of informal powers as well, such as for example, writing out to the firm, such as for example, thematic review, which aren't subject to any internal rules at all, which gives that fluidity of the position. So once we're raising an allegation, we get into the regulatory and disciplinary rules. But before that point where we've got thematic review, where we've got those informal discussions with firms and we've got those informal supervisory tools that we talked about earlier. The SR A is undertaking if you like under section 31 of the Solicitors Act mechanisms to find out whether or not those rules have been complied with. But it's a very fluid position it doesn't, it's not honored if you like within the standards and regulations to say that there are set ways and set decision making and set rules that the sr a must follow when they're doing that. The, you know, these are the only ones that deal with that which really relate to those more formal powers where allegations being raised and possible enforcement action could be uh pursued. So, um there's a real distinction and also the real uh uh space if you like within the standards and regulations where we're not seeing a discussion or internal rules relating to that um informal powers that they can um that they can use. So let's have a look at some different options for the sr A if they're thinking about um what, you know, a formal issue is being raised and uh you know, they've got some um uh options as to whether or not they, for example, pursue an on site investigation, whether they formally decide to take enforcement action against somebody in what circumstances would they decide to use a, an informal power in what circumstances would they decide to use a more formal power? How is that governed? And where does that decision making lie? So, what I've done here is just drawn out some examples of different process charts to try to illustrate the, the difference in different types of processes. And then we're gonna date uh dive a little bit more into uh raising an allegation um in just a few slides of time. So one example, here, you often hear the sr a use the phrase desk based supervision um and that can be writing out to firms both formally um which is governed by the regulatory and disciplinary rules where they're raising a specific allegation or informally where they're just asking for further information. I'm going to give you an example of raising an allegation as we continue on. So where you've got a specific issue where there's a specific issue where the rules may have been breached, for example, or as a supervisor, you require an explanation. Um And the issue may seem to you to be uh have raised with sufficient, for example, evidence behind it where you think actually this could be quite serious if it was true. Um We need to think about raising this formally with someone because um from a procedural perspective, they need to understand the formality involved. They need to understand that this could result in enforcement action against them. So as a result of that, the formality is important that procedural fairness is important. So they may decide to gain an explanation in writing formally from the firm in those circumstances. Um The sr a may raise an allegation and then provide uh 14 days to respond. Um This is for the firm really to then take their time over that receive that allegation and respond back within that time limit and that time limit is part and parcel of the regulatory and disciplinary rules 2019, which as I said, set out that very formal process, very different to that informal process where you just write a letter and ask, you know, for confirmation that this is being done or maybe have a very friendly discussion with the firm which isn't governed by those rules where you've got that formal allegation being raised, you're invoking those regulatory and disciplinary rules 2019, which as says are part of the standards of regulation, then they get the response back, let's say, after 14 days. And then uh a discussion is then had, you know, sort of within the sr a to say, is there enough proof here? What evidence is there? What uh refutes the allegation, you know, what has the firm said in response to that? Have they denied it? What evidence have they supplied uh in order to explain the conduct or refute the conduct and then a decision is made at this point in time, whether to pursue any enforcement action or not. So, it's really important when we have that allegation being raised, that we see that correspondence as being quite different and both formal and possibly leading to enforcement action rather than that uh informal correspondence that we can see being sent out as part of uh thematic review or that informal on site visits that we can see. Now thematic review can also be a desk based issue so it can be somebody sitting behind a desk and then uh typing out these letters that are being sent out or it can be uh on site supervision. And these are these informal approaches that you might see, but there's a general market issue that needs to be there. And it's that standard correspondence that I spoke about at the beginning. And we can make the distinction, as I say between uh the individual bespoke uh solution that needs to be proposed for firm with quite a lot of problems, firms with quite a lot of complaints. For example, specific allegations of misconduct where there's issues that could amount to uh you know, causes for practice certificate conditions or even intervention grounds very different to there being a general market issue. So for example, checking on lots of firms and their compliance with the transparency rules or asking 100 firms to send in their anti money laundering risk assessment where they all receive a standard letter and it's a standard request. So you could get a standard letter in this type of situation or you could get a random on site informal visit. And the sr a likes to do random on site informal visits to make sure that when they're, you know, targeting their visits on the risk basis that they calculate to make sure sure that they uh are getting that calculation right, that they're not missing people, but also to make sure that those hundreds of firms that never cross its path because they never receive any complaints and they never have any misconduct allegations to make sure that those firms are genuine and real as well. So sometimes they do do those random on site visits just to say, look, we've never come across to you. We've never spoken to you. We need to make sure you're ok. So in those circumstances, uh you can either have a random on site in formal visit or you can just have a standard letter. And it might also give you 14 days to respond. And then when they get that response back, they can decide whether or not they're going to do anything about that response. So let's say, for example, they ask you to confirm your compliance with the transparency rules by standard letter that they've sent out to 100 firms and you write back and say yes, they're compliant and here's the evidence from our website. And this is also what we're charging people. And these are our information sheets about charges. For example, they might be satisfied with that or they might ask for 100 firms to send in by standard letter, their AM L risk assessment and you all send in a, you know, fantastic anti money laundering risk assessment. That's great. You know, everyone's complied with that. Everyone's demonstrated that they're complying with that. So then they get a response back in at the end of that response point if there's one or two firms, for example, that haven't complied or that have written back in and said we don't need to comply and the SR A don't agree or they're not going to comply because they don't believe they have to. And the sr A don't agree with that, then that can result in further action. They might be given more time to respond with further threats and warnings that if they don't respond appropriately, that there could be enforcement action. For example, if you have a random on site visit may be the same, um, you may be asked to produce the documentation on site. Um And then uh when the supervisors get back to the office, they can have a think about whether they felt you were compliant. And if so, you know, um, you know, you skip right to the end box there to see whether or not there needs to be any further action arising as a result if you have on site visits all on site visits just to double check and make sure everything's ok, can start with a request to see the bank uh reconciliation for the client account. Um And this is really just as a double check for the sr a to make sure that things are, are all right. And ok. Now you can also see on site supervision being used where there's a number of allegations raised against a firm or there's a, an issue raised with the firm that also suggests a management issue. So they might go in internally within that and say there's a number of different procedures that we need to see. And a good example is where you've got a large number of complaints raised against a firm. And then also in addition to those individual complaints, which are all about specific issues, you also have this concern that complaints aren't being dealt with properly. And then there's obviously, you know, people haven't been responded to about their complaints. Peop people's complaints haven't been handled in line with the requirements for leo um people haven't heard anything. The complaints don't seem to be being progressed in any way, they're not getting any responses. So you might then get a response from the SR a in terms of a visit to make sure that everything is ok at the firm and the firm is functioning and being managed effectively in those circumstances where specific allegations might be raised related to those individual complaints. You might also see the SR A trying to support the firm in terms of where you know, uh functioning as a management issue as well and that might result in some ongoing monitoring uh in respect of the firm. So again, an informal response to try to sort out the issue relating to the management of the firm overall. And this is the kind of thing that can ultimately lead to management decision making around practicing certificate conditions as Well, now, in the long term, if these don't type of things don't get put right aside from those allegations which could result in, um, issues being pursued in themselves, you could find the firm subject to uh further enforcement action as well. Notice of on-site inspection is always given in less serious cases. But where you have got a serious case, you can find a no notice issue which we'll talk about in the next slide. And as I say, uh all visits can start with a request to see the bank reconciliation. Now, forensic investigation is uh quite different and that requires uh a position that relates to, for example, um an allegation of breaches of the accounts in no circumstances if it's very serious. So for example, this information received into the sr a to say, for example, that somebody has run off with a client account, then you could end up with a no notice inspection. So somebody turning upon the door to find out what's happened to make sure no further money is er stolen. But also you can end up with a no notice intervention in some circumstances as well where there's just general concerns about the practices bank account, then those allegations would usually be posed in writing. So for example, if the uh compliance with the accounts rules is just about there, but it is a bit of a mess, you could end up with some allegations posed in writing about specific breaches that are then relate to the firm's response. And that could also be the case where there has been an issue, but it's been put right as well. And then it becomes a response usually within the 14 days and the sr a regulatory and disciplinary rules apply. As I said, we have done some other type uh uh webinars including one on investigation and enforcement as well. Um It is important to remember that the there is a real difference and progressively, we've talked about issues that there can seem to be much more serious and forensic investigation. So an investigation of the practices, uh bank accounts is one of the most serious things that can happen. Now, let's move on then. And we're going to before the end of this webinar, just talk about some examples and case studies of raising an allegation with a firm and also what the firm can do in respect of those things as well before we do that, it's important to think about who we could raise an allegation with. And this is where there is a, an allegation of misconduct against the individual. This is quite different to receiving informal correspondence from the SR A. So uh you might have a letter received in your firm inviting that has an allegation. It says, for example, it is alleged that you've breached the rules of professional conduct who would this allegation be against? Well as a regulatory supervisor, you can either raise an allegation against the firm or an allegation against an individual solicitor. Those are the two most common types of allegation against a firm or against the individual solicitor or in some circumstances against both. I, if you have allegations against individuals, they would usually be received addressed to that individual allegations against the firms might be received either addressed to the firm overall or to the cop or coffer. So you need to understand who the allegation is against an allegation against the firm may allege breaches of the firm code of conduct or they may and or they may allege uh breaches of failure to supervise. So, failing to supervise an employee or member of staff. For example, it's important to look out when you're dealing with allegations for anything that might be at ground for intervention into the firm. So for example, breaches of their councils are a good example, allegations against individual solicitors will usually quote breaches of the individual uh code of conduct and may also contain warnings as well if there could be practicing certificate condition conditions imposed in, in addition to that as well. The SR A also has the right to raise allegations against un admitted persons and under section 43 of the Solicitors Act 1974 the sr A can uh prevent uh uh an un amit person working in the solicitor's office in the future and those cases are only expected when it's serious. So for example, if somebody, um, took money from somebody at the front door who was UN admitted, put it in their back pocket instead of giving it to finance, to put into the client account, they, the sr A may in that circumstance decide to pursue, uh, an allegation under section 43 against that un amit person usually raised as a breach of the individual, uh, code of conduct. In addition, there could be allegations against cops or coffers for failing to discharge their duties raised potentially as breaches of either the individual or firm code of conduct. And then also there can be allegations similarly against managers as well within firms who are part and parcel may be approved by the SR A but also uh recognized as being part of the firm and decision making is part of the firm by the SR A and that they are jointly and severally responsible if you have a look under the firm code of conduct. So do bear in mind that they could be raised against a range of persons. Let's have a look at this uh case study that I've written here. So in this circumstances, you have to imagine your regulatory supervisor, you receive information from the court that a solicitor uh was not competent when they be appearing before the court. The solicitor said they'd not researched the relevant area of law before appearing. The firm had sent the solicitor as a last minute replacement for someone else and the court are not happy with the solicitor's conduct. So then the court have uh complained to the. So a and you've received a letter at the SR A and you have to think about what to do next. Ok. So in these circumstances, you could decide to raise an allegation with both the firm and the individual to receive an explanation. And we talked earlier about the issues of procedural fairness, for example, to make sure that that person who understood that sometimes these things can be quite serious if you saw an informal explanation from someone. And it later became apparent that there was an issue, it causes a problem because people haven't necessarily had the warnings or understood the seriousness of the situation overall. So how might that allegation look and this is how you can tell what you're receiving when you receive it in the correspondence. It would usually be worded to demonstrate that the person is alleged to have breached the rules of conduct. Ok. So for individual solicitors, it would refer to the code of conduct for solicitors 2019, um or the principles and then for firms, when the allegation is raised against the firm, the code of conduct for firms 2019 or the principles one way of doing it is to write, you have and in so doing in breach of so I've given an example on the the site here to the individual you have appeared at and then you have to put in, for example, the court's name um and the date uh representing and then insert the name of the client without being aware of the relevant legal position in. So doing, you have failed to uphold um the administration of justice and act in the best interests of your client in breach of principles. One and seven of the SR A principles 2019 and failed to maintain your competence in breach of rule 3.3 of the sr A conduct uh code of conduct for individuals 2019. Ok. So you're talking there about the principles, you're talking about the code of conduct and it's an allegation, ok? And that might be indented within a letter. If you have an allegation against the firm, it would reference the code of conduct for the firms 2019, as I said, all the principles but same basis, ok. But might be the same that's raised on a separate letter, uh setting out the situation to the firm uh raised and written slightly differently to account for the different position. So it might say, for example, you have allowed insert name to appear at insert court name on insert date, representing their client's name without being aware of the relevant legal position in. So doing, you have failed to uphold the proper administration of justice and act in the best interest of the client in breach of principles. Uh One and seven of the sr a principles 2019. And to ensure your uh employee employee was competent to carry out their role in breach of 4.3 of the sr a code of conduct for firms and failed to supervise your employee in breach of rule 4.4 of the sr a code of conduct for firms. So you can see there and I really have, you know, put down all the things you could possibly put down there. There may be other relevant parts of the code of conduct. But you can see how allegations can be raised against firms for what the employee does and also for supervision issues as well as for breaches of the code of conduct for firms as well. And allegations against the individual are more direct and relate to them. Now, those two things could accompany each other and in these situations, the firm could then write back and say, yes, we have uh undertaken further work with this individual, for example, or to refute the allegation and to say that the person was just flustered on the day and was having a bad day because of these personal circumstances. For example, there's lots of different things that could be done to further or explain the situation and they would then get 14 days to respond. But raising an allegation can be quite different from uh informal correspondence, for example, under thematic review that says, uh one thing uh can you please send us a copy of this or can you please confirm this? It's quite different to receiving an allegation such as this? So what can the firm do in these situations if you get formal correspondence or informal correspondence from the sr a read it very carefully and learn to understand the difference. Look out for any form of allegation or understand what is there. If you think that it's informal correspondence, have a look on the Sras website at the latest news and also uh what they're sending out to firms as well. Some information can be contained in their latest updates to say we've written out to 100 firms or 250 firms to ask them to confirm their compliance with this specific issue or to ask them to, for example, send in this anti money laundering risk assessment. If it's standard and general correspondence, that's quite different to receiving an allegation. Need any in any respect. You may want to take advice if you're uncertain about the position. If you do receive an allegation, understand who is subject to the allegation. First of all, have a look at any warnings and directions including dates for response, evidence required and regulate your action that it talks about in there. Make sure that you've directly located the allegation and sometimes it's indented to make it clear to yourself, make sure if you think about and it's serious and you need to take legal advice and that might need to be separate legal advice for the firm and also for the individual and make sure that you go back to the so a within the time frame or in some circumstances, you may be able to negotiate an extension that's not always guaranteed if there is an allegation, make sure that you respond to the allegation directly. Sometimes people get distracted if circumstances are set out and they don't always agree with the circumstances. Make sure that you would disregard any irrelevant situations. Don't get drawn into a, he said, she said type argument with anybody else, make sure that you're responding to the allegation directly and clearly prepare your explanation. Refute anything you don't agree with and demonstrate your compliance overall. And this is a really good point. It's not just talking about that allegation. Sometimes if you include information to demonstrate your overall compliance and the types of things that you do that can be really helpful for the regulator to see. OK. So there's another case study here in respect of on site supervision. But we're coming towards the end of this uh web webinar here. And what this case study really talks about is um just having a discussion around um when somebody might receive uh an on site visit from the S. And it's the example that we've given throughout the webinar there around uh client complaints. And in this situation, the SR A has gone on to see uh a firm where they've done a lot of work with the firm in the past to improve client care procedures and things seem to have improved for about six months. However, a raft of complaints have all been received at the same time in these situations, if there needs to be specific allegations relating to professional conduct, they could be raised direct with the firm. But the regulator may decide an informal visit or additional visit to look at the procedures of the firm is in uh is in order and then would notify of that position if you have are subject to that on site supervision. You might for example, uh see in this circumstance that I'm talking about here, um in the case study that we've just discussed, you might see them looking at first of all the reconciliation because they may always look at that regardless of the the issue being raised. But then you might also see them looking at complaint handling procedures such as what's happening with ongoing complaints, any third party complaints you have or where you are with a resolution of complaints at legal ombudsman and complaints statistics also whether you've got any insurance referrals. So anything around that subject related complaints, you might also see them looking at management responses. So management work that's been undertaken continuous improvement by the firm and also general uh client care procedures as well. Individual staff who are responsible may be interviewed. But then also within that, you might see them taking a deep dive into the types and cases of at issue. So having a look at their files on complaints concerned or even their overall department's work on different files just around those subjects. So looking at those individual files or complaints, but also what the firm is doing on it and department is doing on its files overall, any other issues that have been complained of internally to the firm or other instances that have been raised with the firm that the firm are aware of. So there's a range of different actions around that subject and a range of different evidence that the SR A may seek if they visit on site and what can the firm do to prepare in those circumstances? General suggestions for any type of visit include making sure that you check and update your bank reconciliation, having a think about management review in areas of concern in detail and to reinforce management in these areas and take action. The sr A really like to see a strong management response to any issue of concern. So make sure that you've thought about how you can update your procedures. What you can do, make sure procedures are being followed in practice or change your office, manual, introduce new procedures. If you think things have been letting you down and retrain your staff are all really good. Uh things that you can do if they are coming in, make sure key staff are prepared and we play out some interviews. If you think that would help your staff answer the questions more effectively. In this case, study, complaints cases would need to be up to date and available for review. Causes of complaints would need to be being tackled by management very directly and maybe better early resolution procedures as well. So they're not going into the legal ombudsman would be three initial suggestions that I would make. Now that brings us towards the end of today's webinar. There is this exercise for you to do that's available for you in your notes. And what I would like you to do is to take this away and think, how would you respond to correspondence from the SR A have a look at your policies and procedures and think about how you should deal with them if you receive a letter or email from the sr a update them. Ok. So work with your offer or go and ask their permission to work with them on this as a specific thing and say, look, I've watched this webinar with data law and they've got some really good ideas for some things that we can put in there. You can consider including how to identify the type of correspondence that you're receiving from the SR A. Is it a standard letter? Is it an allegation letter? How would you think about responding to allegations? What do you need to bear in mind? Having a think about the relevant aspects of the code of conduct. For example, who the allegation is uh for making sure that you've identified the allegation in the letter and responding directly to that and thinking about responding as an explanation or refuting. But then also demonstrating your overall compliance in the area concerned, preparing for on-site visits. Thinking about your procedures there, who would be responsible, ok. Who's responsible for overall management responses of issues for the sr A procedure improvements, uh files to be reviewed and pre progressed and other ideas that you can put into procedures of types of responses you can implement if the SR A are concerned, lots of which we've contained here and also available in your notes. So take this exercise away and do that within your firm and try to be prepared for the types of correspondence that come in. And this would mean if you do receive anything serious, which touch bridge that you won't, then you are prepared and uh available and ready to, to deal with that. You may also include who you would take legal advice from or next steps if you uh anything is received uh to that uh uh that needs that kind of uh additional support. So that brings us to the end of today's webinar. We've looked at what regulator supervision is. The SR A is a key legislative position around that. And then some supervisory tools on thematic review on site visits, desk based supervision and also the theme that raised an allegation, which we've tackled at the end of today's session. We've been through an awful lot and we've also tackled at the end there, what the firm can do. There's lots of information available in your notes for you to take away and have a look at and there's the exercise for you to do as well. So, thank you very much for watching.
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