The Solicitors Regulation Authority stood up to ‘unbearable’ pressure from ‘well-connected individuals’ to authorise alternative business structures without proper checks, the regulator's executive director has claimed.
In her last public speech in the role, Samantha Barrass also gave a revealing insight into her frustrations with large sections of the legal profession, including other regulators. She also admitted that ‘informal pressure’ had been placed on the SRA to end its financial investigations into high-impact firms.
Barrass (pictured), who leaves her post in February, accused the Law Society of ‘seeking to wind the clock back to the previous millennium’ with its call to the government for some regulatory powers to return to Chancery Lane.
She said the Society's response to the Ministry of Justice call for evidence on legal regulation showed it regarded the Legal Services Act as a ‘momentary blip in the historic process of chaps regulating chaps’.
Patricia Greer, the Law Society's chief of corporate affairs, described Barrass's comments as a 'wilful misrepresentation of our position'.
'We are not looking for a return to the 1990s, we are looking forward to small changes which would reduce duplication between bodies and provide clear separation between standard setting and enforcement.'
Speaking at the same event, Greer defended the Society's plan as a ‘pragmatic, achievable and affordable’ answer to the regulatory problems.
‘We wanted to submit proposals which would make a difference to the profession, ensure that our legal services could compete and provide appropriate levels consumer protection,’ said Greer. ‘Our proposals will redress the imbalance between regulator and professional body and give the profession greater involvement in how it is regulated.’
The SRA has been vocal in advocating a further separation of powers between the representative and regulatory bodies to create an entirely independent – and separately funded – regulator.
Barrass said: ‘Our submission [to the Ministry of Justice] addressed the challenges of regulation across the whole sector and market; a market no longer defined by professional titles and one in which the artificial barriers created by those titles are breaking down rapidly. The Law Society’s response did not even acknowledge such a market; focusing instead on a narrow, profession-centric, approach to regulation.’
She also alleged the Law Society Council had sought to stop the SRA from licensing ABSs ‘to prevent competition from ABSs to traditional firms’.
And she suggested that regulation which relies on narrow titles is ‘no longer practicable’.
‘We are regulating firms with a mixture of solicitors, barristers and legal executives,’ said Barrass. ‘And what about firms such as BT, Saga and the AA? Consumers don’t think “I need a solicitor” or “I must get a barrister”, they simply want someone suitably qualified to help them sort out their legal matters, knowing that they will be protected if things go wrong.’
Barrass revealed there had been ‘significant’ pressure, often implicit, from ‘well-connected individuals’ to authorise particular ABSs as quickly as possible in the early months of the process. In one case, which did not result in authorisation, the pressure felt at times ‘unbearable’, she recalled. ‘It would have been easy to go “oh all right then” but it was not the right thing to do, so we didn’t.’
Barrass gave an insight into the kind of challenges facing a legal regulator in the current financial climate.
She said regulators had ‘held their nerve’ against pressure to end probes into the biggest firms on the basis they can run their businesses properly.
The SRA, she added, has uncovered ‘very significant levels of misconduct’ in firms, extending up to and including dishonest, money laundering and other criminality.
‘These include, just at present, multi-firm frauds involving multi-million pound overseas investment funds, multi-firm conveyancing frauds; and money laundering involving the Russian mafia.’
Barrass, who is leaving to become chief executive of the Gibraltar Financial Services Commission, said she wanted to finish her speech with a tribute to SRA staff.
‘A lot has been said and acknowledged about the improvements we have needed to make and still need to make. There’s been a lot of brick bats, and thick skins are the order of the day. No one goes into regulation to be popular – it will be ever thus.
‘The staff at the SRA do a lot of good. They spend most of their time clearing up messes that no one would argue don’t need clearing up.’