SRA announce two key changes to the SRA Accounts Rules & safeguards

The link below provides details of changes the SRA plans to make to the SRA Accounts Rules intended to “Strengthen protections around client money and ensure ongoing compliance within firms”.

SRA | SRA strengthens safeguards to protect client money and reduce consumer harm | Solicitors Regulation Authority

The announcement issued yesterday flags two areas of change:

1. Accountants Reports

• All law firms will need to annual submit their Accountants Report to the SRA within the required timeframes (irrespective of whether the report is “qualified”)
• Those firms eligible for exemption from preparing an Accountants Report will also have to report to the SRA to confirm that exemption applied
• There will be financial penalties for non-compliance within the required timeframes

2. Separation of roles

• “Higher risk” firms with turnover exceeding £600,000 or holding over £2m of client funds will be required to ensure that individuals who make significant decisions about how the firm is run cannot also be the COFA or COLP
• There will be some exemptions for small sole owner firms where segregation of duties is practically constrained
• There is suggestion there will be different arrangements for larger or more complex practices

Curiously, the changes to the Accountants Report arrangements take us back to the era in the rules pre-Outcomes Focused Regulation. The release refers to firms providing “key further information through a declaration” although it stops short on any detail of what this additional information might be. In essence however these proposals do appear to address some of the basic concerns highlighted to the SRA in their last consultation from respondents.

The separation of roles is clearly aimed at addressing some of the control failures experienced in the sector in recent years. The release is lighter in detail on this aspect and how it will be implemented in practice, so it will be interesting to see the detail on this aspect in due course.

As always, any changes to the SRA Accounts Rules need to be first approved by the LSB but assuming this progresses, the SRA anticipate the new rules will come into force in early 2027.

Whilst there may be differing opinions on this, in my personal view, on first reading this feels a positive development.

If you have any immediate queries regarding the SRA release, please get in touch.