Beyond the headlines: key insights from the SRA COLP/COFA Conference

So, what changes may be on the horizon?

The SRA stated that the existing rules on client account interest are likely to remain unchanged for now. However, this is far from a closed chapter. This area, along with the broader question of solicitors holding client money at all, is considered a long-term issue requiring further consultation. The Ministry of Justice (MOJ) has recently entered the debate, hosting roundtables on the use of interest earned on client accounts, for example, to generate extra funding for access to justice via an interest on lawyer’s client account (ILCA) scheme. We expect this conversation to continue at both regulatory and governmental levels.

The SRA indicated that changes to the rules governing reporting accountants and the AR1 process are under consideration. These adjustments aim to improve oversight and ensure compliance remains robust across firms. Examples given were the implementation of declarations as a baseline protection, with potential exemptions in certain circumstances, or the requirement for all firms to submit an accountant’s report.

Another area flagged for further consultation is whether it is appropriate for firm owners and managers to also hold compliance roles such as COLP or COFA. The SRA is likely to explore whether thresholds, such as turnover, service type, or risk profile, should determine when these dual roles may be permissible. The goal is to strengthen the effectiveness of compliance functions and reduce potential conflicts of interest.

To stay ahead of these developments, firms and compliance personnel should start thinking about taking practical steps such as:

1. Review compliance structures: assess whether your compliance roles are sufficiently independent and effective. Consider whether current ownership and compliance responsibilities create potential conflicts.
2. Review current policies and procedures: ensure your processes for protecting and handling client money comply with current Accounts Rules, and anticipate future changes and scrutiny, particularly on residual balances and the use of client account as a banking facility
3. Engage with consultations: firms are encouraged to respond to the upcoming SRA consultation. Your input can shape practical, workable rules for the profession.

The SRA may have stepped back from radical reform for now, but the conference reinforced that these issues are far from settled. For legal finance professionals, now is the time to:

• Stay informed on upcoming consultations
• Assess internal compliance structures
• Prepare for incremental but meaningful changes

^{*the views expressed are the author’s and not ICAEW’s}