In a decision that is sure to generate mixed reaction within the market, the Solicitors Regulation Authority approved measures yesterday [17 September] to progress its plans for regulatory reform, and voted to make it easier for multi-disciplinary practices (MDPs) to provide legal services under its regulation.
The approved changes will, according to the SRA, ensure proportionate regulation where firms deliver a range of services under the oversight of a number of regulators in a bid to ‘encourage the development of a range of new businesses and services and increase competition and client choice in the market’.
The SRA said the existing requirements for MDPs appeared to be a barrier to the development of this business model and as such, non-reserved legal activities can be regulated by other professional service regulators in a ‘SRA-authorised MDP ABS’.
The objective is to continue to open the market to new businesses and services in order to reduce the burden and cost of regulation.
Such a decision will make it easier for accountancy firms to enter the legal market by excluding some of the legal work they undertake from regulation. The Law Society expressed its disappointment at the decision and yesterday a spokesperson said the proposals ‘to create exceptions to regulation for accountancy firms remain complex and we question whether they are workable.’
‘Removing legal work from the SRA regulation where it is undertaken by an accountant within an Institute of Chartered Accountants in England and Wales-regulated firm will create confusion for clients.’
The spokesperson added: ‘We believe that it is wrong that legal work done in an organisation regulated by the SRA should be subject to different regulators and thus different standards depending on the individual doing the work’.
Other approved changes by the SRA yesterday include some to the requirements for accountants’ reports on client accounts. Firms will still be required to commission accountants’ reports within six months of their financial reporting period, however, only those reports that are qualified will have to be filed with the SRA. Firms that receive 100% of the fees from legal aid work are exempt from needing to commission a report.
It follows a sustained run of proposals of regulatory reform announced by the SRA which has included far-reaching plans to overhaul legal training, and cutting the minimum compulsory cover for professional indemnity insurance (PII) from £2m to £500,000 during the summer against strong opposition from the Law Society and other bodies.