SRA consults on drastically increasing its powers to impose financial penalties

The Solicitors Regulation Authority (SRA) has initiated a consultation into the use of its internal powers to issue fines to firms and individuals. Under the current regime, the SRA is able to impose a maximum fine using its internal powers of up to £2,000. If it considers that a greater financial penalty would be warranted then it is required to refer the case to the Solicitors Disciplinary Tribunal (SDT) whose power impose sanctions is greater (it being an independent tribunal).

In its consultation paper, the SRA says it is proposing:-

• To raise its internal powers to fine a firm or individual up to £25,000;
• To introduce a scale of fixed penalties for lesser misdemeanors;
• To take greater account of means and turnover when deciding on the level of financial penalty.

The SRA says that these proposed changes will:

• Resolve cases more quickly;
• Reduce costs;
• Reduce stress for professionals; and
• Provide consistency.

It should probably be added that such increases would also be likely to increase revenue for the SRA which may go to assist the reduction of delay. The current position with SRA investigations is wholly unsatisfactory and reference to the statistics provided in the consultation document emphasises this. At present, the average length of time to conclude a case which is referred to the SDT is 960 days – nearly 3 years. Even those investigations which are concluded internally by the SRA take on average 458 days to conclude – nearly a year and a half. It is, of course, correct that the SRA has broadened the scope of its regulatory remit in recent years and hence the number of investigations it conducts has increased markedly. The provision of additional revenue would be likely to go in some way to mitigate the current delays in investigation.

Much of the additional scope in regulatory remit has been precipitated by investigations involving allegations of sexual harassment and discrimination. In the consultation document the SRA expresses the view that such cases should be considered unsuitable for a financial penalty. This is the commentary:-

“We want to particularly seek views on whether sexual misconduct should be considered unsuitable for a financial penalty. Our provisional view is that it should. This is an area that has increased in profile in recent years. We saw a significant increase in the number of reports arising from the #Metoo movement. The numbers have reduced from that high point but we still have over 100 pending cases. Many of the sexual misconduct cases that we have referred to the SDT in the past few years have received financial penalties. This includes the highest fine issued in 2020 for a serious allegation of sexual misconduct of £55,000. By contrast, a solicitor who inappropriately touched a paralegal on several occasions in front of colleagues and clients was fined £10,000. These findings have resulted in much debate, including in the media, often questioning whether any sanction short of restrictions on practice for behaviour of this nature can meet public expectations”.

The cases referred to by the SRA above relate to penalties which have been imposed by the SDT – not by the SRA themselves (as the consultation document states the SRA are unable to impose fines in excess of £2,000). In so far as the writer is aware, those decisions were not made subject of appeal to the High Court by the SRA (as is its statutory right).

The SDT is by its very nature independent of the SRA who prosecute cases before it. It was created by section 46 of the Solicitors Act 1974. Its powers, including the power to order payment by a solicitor of a financial penalty, are derived from statute (quite independently of those of the SRA). It governs its own procedures and it has its own sanctions guidance. Its independence from the SRA has been confirmed in a host of High Court decisions (most recently Virdi v Law Society [2010] EWCA 100).

The obvious concern about the above passage is that it would appear that the SRA is canvassing opinion to seek to influence the decision-making processes of the independent tribunal which is deciding on sanction following findings, having heard evidence, in respect of prosecutions brought by it. As is detailed in the consultation paper, the SRA has a backlog of over 100 pending cases. On its own guidance those cases will be referred to the SDT and it is the SDT, not the SRA, which must have the ultimate power to decide on appropriate sanction. The inclusion of opinion about past sanction in a consultation document about its own internal powers may raise eyebrows within the profession.

Response to the consultation document can be made until 11 February 2022 here.

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