In her speech on 19 April announcing the delayed dates for the submission of nominations for the appointment of COLPs and COFAs, SRA executive director Samantha Barrass is reported to have said that in support of the nomination ‘a senior manager from the firm must confirm that the firm has suitable arrangements in place to ensure that the COLP and COFA are able to discharge their duties’.

Typically, the SRA leaves it to firms to decide for themselves what it might mean by ‘suitable arrangements’. However, Ms Barrass provided a clue when she went on to say ‘senior managers will be held to account and will not be able to absolve themselves of their responsibilities. The intention is to create a firm-wide culture of compliance’. This resonates with outcome 7.2 of chapter 7 of the Code of Conduct, which deals with ‘management of your business’ and leaves no doubt that the basis for the creation of a compliance culture is the adoption of the management systems and controls required by the SRA’s new principle 8.

But how can any manager confirm that these systems are in place even before the appointment of a COLP and COFA has been approved? The experience of the Financial Services Authority, whose principles-based regime provides the template for OFR, is that these systems take years to achieve, even given third-party support. Asking firms’ managers to confirm in this casual way that systems and controls are in place not only exposes those individuals to the risk of subsequent recourse but also creates the unfortunate impression that OFR is after all ‘light touch’, in the sense that it need not be taken too seriously.

The gargantuan fines which were announced recently seem at variance with this assumption. Or perhaps I don’t understand because I haven’t been listening.

Ian Muirhead, Managing director, SIFA Legal, Epsom