The SRA has unveiled plans to tear up the separate business rule that prevents law firms having links with businesses offering non-reserved legal activities.

The regulator said it wants to ‘level the playing field’ between traditional solicitors and alternative business structures or unregulated providers.

The SRA has previously rejected calls to scrap the rule to ensure members of the public are not confused or misled into believing a separate business is regulated by it.

But the emphasis will now focus on making sure firms achieve consumer protection rather than the make-up of their business.

The proposal follows changes earlier this year to allow multi-disciplinary practices to offer legal services.

Crispin Passmore (pictured), executive director for policy, said reforming the separate business rule will allow solicitors to make the opposite move.

‘All sizes of solicitor firms will benefit from having the flexibility to diversify and work across regulatory boundaries,’ he added. ‘This in turn will create increased competition, and ultimately that will benefit consumers.’

The SRA started a consultation on its proposals on Thursday in which it outlined safeguards that will protect consumers. It runs until 12 February.

Firms will have to be clear about the extent to which services are offered by the separate business, and it must not be represented as regulated by the SRA.

Clients can only be referred to the separate business when it is in their best interests and they have given consent to the referral. Planned referral restrictions will be put in place in relation to probate, conveyancing and litigation services.

Solicitors who are on the roll and provide services to the public within a separate business will no longer be able to describe themselves to clients or potential clients as ‘non-practising solicitors’.

The consultation states the changes will help solicitors to offer a wider range of services and allow clients to access more ‘holistic’ services.

They are expected to benefit business customers in particular, as evidence suggests small and medium-sized enterprises currently struggle to access affordable legal services.