The SRA’s Revised 2024/25 Business Plan: A Focus on Consumer Protection, Risk Management, and Transparency

The Solicitors Regulation Authority (SRA) has published its revised Business Plan for 2024/25. They outline their strategic priorities and focus for the upcoming year. The plan runs from November 2024 to October 2025 and is part of the SRA’s broader Corporate Strategy. The revised plan underlines risk management, consumer protection and improved transparency as part of the SRA’s commitment to maintaining high professional standards and adapting to emerging challenges.

Key Priorities and Areas of Focus

Risk Management: The SRA aims to enhance its approach in identifying and managing risks at a much earlier stage. It involves better use of data and credible intelligence to spot risks sooner and respond more effectively. The plan includes work on bulk claims litigation and other emerging risks in the sector. The controversial use of generative AI in identifying red flags is something regulators are leaning towards, but the sheer cost of processing the necessary data means that widespread use of these models will only happen once processing costs fall to a more manageable level. Financial institutions are at the forefront of this movement and it will be a while before an entity funded by its professional members can really justify large scale strategic investment in the technology.

Consumer Protection: The Business Plan places strong emphasis on protecting consumers from harm. This includes ongoing work from the Consumer Protection Review, which is one of the largest projects ever undertaken by the SRA. The review focuses on core protections within the regulatory framework, particularly with regard to client money and the safeguards provided to the public in an increasingly diverse and evolving legal services market.

Improved Transparency: Transparency is a critical issue for the SRA and it has struggled with the concept over the years. The plan includes efforts to improve the information available to consumers to help them make more informed decisions when choosing legal services. The research shows that clear costs advice is essential in building trust and confidence in legal services. Any lawyer will tell you that the main source of complaints from clients relates to costs and the surrounding communication. However, publishing costs information gives competitors an edge, so there will always be a tension between costs transparency and profitability.

Enforcement and Sanctions: The revised Business Plan includes interesting commentary on the SRA’s approach to enforcement and sanctions. The SRA has committed to improving the speed and quality of its investigation and enforcement work, although it is not entirely clear how this can be funded without impacting the membership. It includes a focus on financial penalties, which the SRA see as a crucial tool for maintaining professional standards and deterring misconduct.

The SRA’s interest in fixed penalties has not been short of controversy. Fixed penalties are designed to provide a swift and proportionate response to certain types of misconduct, but will they become a business expense for large firms and a disproportionate burden for small firms? Fixed penalties potentially offer a streamlined process for dealing with breaches, reducing the need for lengthy investigations and hearings but they necessarily use a broad brush to deal with cases in which the conduct can be quite complex. The fixed penalty concept aims to enhance regulatory efficiency and ensure that resources are focused on more serious cases. Only time will tell whether their use really benefits all the stakeholders.

Comments from the SRA and Stakeholders

Paul Philip, SRA Chief Executive: Paul Philip emphasized that consumers are at the heart of the SRA’s strategy. He noted that the feedback received during the consultation process was generally positive, with stakeholders supporting the focus on consumer protection and transparency. He underlined the importance of responding to new and emerging risks in the legal sector and ensuring that the SRA’s regulatory approach remains proactive and effective.

Professional journals and media outlets have broadly welcomed the SRA’s revised Business Plan. Commentators acknowledge the focus on consumer protection and proactive risk management. However, some have raised concerns about the potential impact of increased financial penalties on smaller law firms. There is a recognition that while fixed penalties can enhance regulatory efficiency, they must be applied fairly and proportionately to avoid undue burden on smaller practices.

Similarly, The Law Society has expressed support for the SRA’s strategic priorities, particularly the emphasis on improving transparency and maintaining high professional standards. However, it has also called for careful consideration of the impact enforcement measures may have on the legal profession, especially in terms of financial penalties and their potential to disproportionately affect smaller firms.

Conclusion

The SRA’s revised 2024/25 Business Plan is a comprehensive approach to regulation in the legal sector, with a clear focus on the three main areas of most concern. The emphasis on enforcement and sanctions, particularly the use of fixed penalties, reflects the SRA’s commitment to maintaining professional standards while ensuring regulatory efficiency. It remains to be seen whether – or to what extent – the new sanctions landscape really achieves the stated objective without creating more problems than it solves. As the legal services market continues to evolve, the SRA’s proactive and responsive approach will be crucial in addressing emerging challenges and protecting the interests of consumers, but the SRA will want to avoid alienating the very practitioners it was set up to support.