Latest on LSB’s list of binding directions for the SRA

Full details can be found on the LSB’s website.

Among the key areas covered by the directions are the following noteworthy subjects:

• Governance – in particular, the need to improve SRA board-level oversight of regulatory risk and intelligence and to ensure ‘consistent, accurate and timely’ records are kept of regulatory decisions
• Risk and M&A – the need to stablish a framework for identifying risks, including those arising from M&A activities, and to share information more effectively between internal teams. Introducing oversight mechanisms and ensuring that the SRA receives advance notice of potential M&A activity.
• Authorisation – strengthening controls around the review of ownership, COLP and COFA compliance and the concentration of management roles around one individual

Perhaps the most immediately relevant to many readers is the topic of client money and here the LSB is urging the SRA to use a risk-based approach in order to assess firms’ financial stability, including obtaining and reviewing firms’ financial and accounting information whilst ensuring firms have effective safeguards to protect client money.

This latter point brings to mind the SRA financial stability indicators from a number of years ago, including the ‘red, amber and green’ factors and, slightly more recently, the ‘good’ and ‘bad’ behavioural lists.

Since these directions were issued, the SRA responded on 4 July with an implementation plan which details the steps it intends to take to comply, as well as a timeline for putting each element in place.

This can also be seen at the LSB page signposted above, and there is too much detail to summarise here, other than to say that the majority of steps look set to be in place by the end of summer 2026, with much of the policy drafting being completed by the end of this year. This is to tie in, no doubt, with the new SRA Chief Executive, Sarah Rapson, who will replace Paul Philip then.

Looking specifically at the client money supervision points, it is interesting to note that the SRA has set the end of 2025 as the date for further consultation on proposed rules changes, with the end of August 2026 as the target date for setting out the ‘refined project plan for future implementation of rules’. Perhaps we have another year before we see how the SRA plans to deal with hot topics such as residual balances.

Detail is deliberately sparse at the moment but watch this space for further updates as they become available.