The Solicitors Regulation Authority’s chief adviser on regulating the City has insisted the relationship between big firms and their regulator is as good as it has ever been.
Nick Eastwell, a former partner with magic circle firm Linklaters, said the perception of the SRA in the City has ‘changed markedly’ in recent years as the regulator has built up greater understanding of the sector.
As recently as 2009, the Smedley report suggested the SRA was ill-equipped to regulate City firms and that they should seek to be regulated differently from the bulk of the profession.
The issue was raised again in September when the City of London Law Society (CLLS), responding to the government’s review of regulation, said the Smedley recommendations had ‘either not been adopted or diluted’.
But Eastwell said the new outcomes-focused regime has meant the SRA is more flexible and pragmatic in its approach.
‘The general feedback I’m getting is that the City thinks the SRA is doing a decent job in understanding, liaising with and generally regulating the City firms, and the antipathy that once was there has largely dissipated,’ he said.
Part of that improvement in relations, Eastwell acknowledged, was the SRA adopting a more ‘hands-off’ approach to regulation and allowing City firms to self-regulate to a degree.
He added: ‘Generally speaking, there is nothing the SRA requires the City firms to deliver in the context of complying with the outcomes and principles that they are not demanding of themselves.’
The issue of cost was also raised by the CLLS in September, with the society stating that the ‘majority’ of the £80m regulatory budget was met by City firms.
Eastwell responded: ‘Bad and failing firms damage the brand and, as a profession, we don’t want to see that brand damaged. An unwelcome consequence of that need to regulate the whole profession is the cost, but so long as the SRA continues to move in the direction it has thus far, the City appears prepared to subsidise the rest of the profession.’