Compliance officers should have the confidence to approach the SRA with any concerns they may harbour without the fear of automatic reprisals, the regulator’s head of supervision said yesterday.
Compliance officers should have the confidence to approach the Solicitors Regulation Authority with any concerns they may harbour without the fear of automatic reprisals, the regulator’s head of supervision said yesterday.
SRA executive director Samantha Barrass told a conference in Birmingham that Colps and Cofas should not worry about being ‘second guessed’ by their regulator.
While there are ‘encouraging signs’ of firms being more willing to share information and ask for advice early, there remains a section of firms that either refuse to communicate or do not see doing so as a priority.
‘We need to have the confidence to have a two-way dialogue, with our supervisors picking up the phone to you and likewise you picking up the phone to us and saying "you should know about this",’ she said.
‘It’s always best to talk to us early despite internal pressure not to do so. We don’t want to find out about [non-compliance] through the legal media, a third party or a whistleblower.
‘It’s critical as well to bring about a change of culture so managing risk is everyone’s job. Some compliance officers have been worried about being isolated or receiving insufficient cooperation. Senior management should provide unambiguous backing to compliance officers.'
Barrass said the SRA had noted a ‘significant correlation’ between financial instability and dishonest or unethical behaviour.
In one case, a firm had reported £1m profits to its lender while at the same time recording a £100,000 loss with HM Revenue & Customs.
‘We have seen firms really take our message on board - their drawings policy is changing so distribution is linked to cash collection and a real focus on cash and lock-up days reduced,' she said.
‘But there are worrying examples of bad practice: overdrawing is still a major problem with payments made to partners irrespective of cash. There has been borrowing from family members or clients and no provision for payments for tax or insurance premiums.’