COLP and COFA: Compliance in Practice: Third Edition

It is a condition of authorisation that all SRA-authorised law firms must have a compliance officer for legal practice (COLP) and a compliance officer for finance and administration (COFA), and that these individuals must comply with regulatory duties imposed on them personally. Now in its third edition, COLP and COFA: Compliance in Practice provides the role-holders, and anyone concerned with supporting the role-holders, with essential information about regulatory and ethical standards and compliance procedures that will support the achievement of these standards and facilitate a good working relationship with the SRA. Written by Tracey Calvert, a former employee of both the Law Society and the SRA, this edition has been updated to include the latest requirements as evidenced by the SRA Standards and Regulations, and includes lessons learned from supervisory and enforcement action.

Table of Contents:
Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii About the author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi Chapter 1: The requirement to have a COLP and COFA Introduction to roles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Brief background to the Legal Services Act 2007 . . . . . . . . . . . . . . . . . . . . . . 1 Role of the SRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Key extracts from Standards and Regulations that explain the authorisation process for compliance officer role-holders . . . . . . . . . . . . . 5 Approval of role holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Approval process for individuals who are not deemed approved . . . . . . 7 Individual role-holder and ongoing transparency requirements . . . . . . . 8 Withdrawal of approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Temporary emergency approval of a COLP or COFA................... 12 Chapter 2: Appointing your COLP and COFA Key extracts from STaRs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Compliance and business systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 The duties of managers in SRA authorised firms . . . . . . . . . . . . . . . . . . . . . . 22 Compliance officers – necessary skills, knowledge, experience Compliance officers – time factors and other considerations . . . . . . . . . 25 Specific considerations about the COFA role . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Can the COLP and COFA be the same person? . . . . . . . . . . . . . . . . . . . . . . . . 27 Can we buy in a COLP or COFA? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Chapter 3: Working with the SRA – understanding entity and risk-based regulation Regulatory objectives and a changed approach to regulation . . . . . . . . 31 The impact of the LSA on the work of approved regulators . . . . . . . . . . . 31 The SRA’s approach to risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Regulatory reach over the authorised law firm . . . . . . . . . . . . . . . . . . . . . . . . 34 The SRA’s supervision and enforcement work . . . . . . . . . . . . . . . . . . . . . . . . . 35 Investigation and enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 What this style of regulation means for the COLP and the COFA . . . . . . 36 Enforcement powers against the COLP and COFA . . . . . . . . . . . . . . . . . . . . . 36 Chapter 4: The COLP’s essential knowledge and suggested systems and controls The extent of the COLP’s responsibilities contrasted with the role of the COLP and the firm’s managers . . . . . . . . . . . . . . . . . . . . 39 Key knowledge from the SRA Standards and Regulations of relevance to the COLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Overview of the STaRs from the COLP’s perspective . . . . . . . . . . . . . . . . . . . 42 SRA Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 SRA Codes of Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Chapter 5: The COFA’s essential knowledge and suggested systems and controls The extent of the COFA’s responsibilities contrasted with the role of the COLP and the role of the firm’s managers . . . . . . . . 95 Key knowledge from the SRA Standards and Regulations of relevance to the COFA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 SRA Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 SRA Codes of Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 SRA Accounts Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 Chapter 6: Identifying, recording, and reporting non-compliance How will compliance officers know what they need to know? . . . . . . . . . 126 Record-keeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 File-based or central records? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 Centralised or decentralised record-keeping? . . . . . . . . . . . . . . . . . . . . . . . . . . 129 Self-reporting by staff or file reviews and supervisory oversight? . . . . . . 129 Just STaRs breaches or all complaints data? . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 Records of decisions to deviate from the firm’s systems and controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 What information should be included in the record? . . . . . . . . . . . . . . . . . . 130 Identifying serious breaches – where to start . . . . . . . . . . . . . . . . . . . . . . . . . . 131 The role of the management team in dealing with non-compliance issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 Common breaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 Chapter 7: Compliance officers and international issues Occasional or temporary practice outside England and Wales . . . . . . . . 135 Firms with an “overseas practice” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 How to respond to this section of the SRA Standards and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138 Other international regulatory issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 Chapter 8: Behaviours outside of practice Equality issues outside of practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 Chapter 9: Personal perspectives The relationship of the COLP and COFA with the management of the firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147 Is the role full-time or part-time?....................................... 147 Should the role be held for a fixed period? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 Should there be a deputy or understudy? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 Remuneration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 When and how often the compliance officer should report to the management team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 How will compliance officers work with the management team? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 Insurance and indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 Sources of help . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152 About Globe Law and Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153

Review :
This is highly recommended reading for all in-post compliance officers – and those not yet wearing the cape.