The Solicitors Regulation Authority is less cocksure than it was, but boardroom flux may also have contributed to this week’s emollient noises on the future of the client account.
As I wrote here a few months back, chief executive Paul Philip was a bold aspiring reformer. He told a seminar last year that the cost of regulation would ‘drop like a stone’ if solicitors were not allowed to hold client money. Anti-money laundering issues would dissipate, he enthused, as would the risk of falling trust in the profession from mishandling client funds.
But Philip’s 11-year reign will be over in a few short weeks. His successor, Sarah Rapson, would not have relished being chucked a hospital pass before she’s even chosen her new office curtains.
To recap, SRA chair Anna Bradley has said the regulator had identified some appetite for change to address the root causes of risks to client money, but added that these were ‘complex issues, that cannot be solved with quick fixes’. To the muffled thud of a vexed issue being vigorously booted into the long grass, she added: ‘We consider there is a strong case to properly explore the long-term transformation of the model of holding client money and how the compensation fund is funded.’
It’s all a bit of a mess, as Gazette columnist Jonathan Goldsmith sagely observed in his weekly blog (tinyurl.com/nh9nfjw6). Different public authorities are moving in different directions on client money, sometimes in opposing directions on the same questions.
Nothing appears to be joined up. We know the Ministry of Justice is looking at siphoning off interest on client accounts to ease funding pressures, so perhaps one of the mandarins at Petty France has had a word with the SRA.
Critics rail at the prospect of a hypothecated tax that other professions do not have to bear. A compelling counterargument, but not necessarily a clincher. Everything that has been done was once done for the first time, after all.
I still cannot see it. More likely in the short term, if the chancellor really wants to tap lawyers for cash, is closure of the fiscal ‘loophole’ created by treating LLP members as self-employed for national insurance purposes.
Hypothecation is definitely optional in that eventuality.
1 Reader's comment