Convicted criminals and undeclared bankrupts were among the people nominated by law firms to be their compliance officers, it has emerged.
The Solicitors Regulation Authority today revealed that more than 1,200 nominees failed an automatic verification exercise to check their suitability to be firms’ self-policing staff.
In board papers, the SRA stated that 450 failed the test for ‘multiple issues’, ranging from undisclosed criminal convictions to serious disciplinary sanctions.
Following detailed investigations and renominations, around 60 nominees had issues so serious that their application was refused.
Even if approval has been granted, the SRA plans to investigate why key issues were not disclosed by firms in their original nominations.
Meanwhile, enforcement action has started against 152 firms that have failed to nominate their compliance officers. The SRA today warned that the firms face the threat of losing their authorisation after refusing repeated offers of help.
The new positions of compliance officers for legal practice, and finance and administration (COLPs and COFAs) are key elements of the new regulatory regime. Nominations were originally due by 31 July last year.
In total, 9,744 firms have completed the process of which 9,165 have had their nominations approved, following the extended deadline of December 2012.
A further 579 firms have completed their nominations but approval has been delayed, either because they needed further investigation or there were suitability issues identified by the SRA. These are expected to be largely concluded by the end of this month.
Samantha Barrass, executive director of the SRA, said: ‘Enforcement action will be proportionate and will range from letters of advice, fines, rebukes, through to revocation of authorisation, and referral to the Solicitors Disciplinary Tribunal.
‘The importance of having the right people in place in these key compliance roles cannot be overestimated and we are pleased at the high levels of co-operation we have received from the great majority of firms.
‘However, our efforts are now quite properly focused on the minority of remaining firms who have failed to co-operate or engage with the SRA.’
The announcement comes ahead of tomorrow’s SRA board meeting, when members are expected to discuss the success of the nominations process.