The SRA and Economic Crime: Is It Time to Dismantle the SRA?

On 15th November 2024, the Legal Services Board (LSB) launched a consultation on how legal regulators can combat economic crime (LSB Consultation ). It shines a stark spotlight on the Solicitors Regulation Authority (SRA). The new regulatory objective, introduced via the Economic Crime and Corporate Transparency Act 2023, mandates the prevention and detection of economic crime as a core responsibility of legal regulators under the Legal Services Act 2007.

At face value, this is a laudable ambition. It acknowledges the pivotal role that legal services can play in either facilitating or curtailing economic crime. However, the question remains: can the SRA, a regulator that already struggles to enforce its own code of conduct, rise to meet these expectations? The short answer is no—and the reasons lie in systemic failings that no amount of process improvement or internal reflection can resolve.

The SRA’s Track Record: Failing Its Own Standards

The SRA’s inability to enforce its own rules is no secret. In my recent commentary on LinkedIn ("The SRA's Attempts to Justify Its Failures Are Both Hollow and Disappointing "), published on 31st October 2024, I detailed how the regulator has consistently failed to act with transparency, accountability, or proportionality—principles it expects solicitors to uphold but cannot embody itself.

From inconsistent application of sanctions to its reluctance to tackle high-profile failures within the profession, the SRA’s shortcomings undermine confidence in its ability to act decisively against economic crime. How can a regulator incapable of following its own code credibly enforce stringent anti-money laundering (AML) or financial crime measures?

The issue goes deeper than inefficiency or resource constraints. It’s a culture of avoidance—a regulator seemingly more concerned with preserving its authority than fulfilling its statutory duties. No amount of training, guidance, or polite encouragement from the LSB will change this.

The Economic Crime Objective: A New Test for the SRA

The LSB’s proposed outcomes for regulators are clear and ambitious: risk assessment, educating regulated persons, monitoring compliance, and regular evaluation. For the SRA, these outcomes represent a significant expansion of its responsibilities, particularly in areas like AML compliance, where it has faced ongoing criticism.

Yet, even before this new mandate, the SRA’s efforts in combating economic crime have been lacklustre at best. Consider the following:

• AML Supervision: Reports have repeatedly highlighted the SRA’s failure to properly supervise AML compliance. Its own annual AML report points to a concerning number of firms falling short of basic requirements, with little to no robust enforcement action.
• Inconsistent Sanctions: Disciplinary outcomes often feel arbitrary. Large firms seem to escape scrutiny while smaller practices face the brunt of enforcement—a disparity that erodes trust in the regulator’s impartiality.
• Lack of Transparency: Despite its public commitments, the SRA has demonstrated a worrying lack of transparency in explaining its decision-making processes, undermining accountability.

Now, with the added burden of promoting economic crime prevention, one must question whether the SRA is equipped—or even willing—to deliver. History suggests it is not.

Why the SRA Cannot Simply "Improve"

The LSB consultation implicitly assumes that regulators like the SRA can rise to the challenge through better processes, improved monitoring, and a more proactive approach to compliance. This is an optimistic but na?ve assumption. The SRA’s problems are not simply procedural; they are structural and cultural.

For years, the SRA has been asked to reflect on its shortcomings and improve its processes. Yet, the same issues persist. This is not a body capable of reforming itself. Instead, the SRA has become a symbol of regulatory inertia—an organisation more interested in maintaining the status quo than addressing systemic problems.

The answer, therefore, is not to tweak the SRA’s processes or hope that it will one day hold itself accountable. The solution is far more radical.

The Case for Dismantling the SRA

The SRA should no longer be the approved regulator under the Legal Services Act 2007. It has failed to fulfil its role in protecting the public interest and upholding professional standards. The time has come to dismantle the SRA and rebuild a regulatory framework from the ground up—one that prioritises public oversight, transparency, and accountability.

A reimagined regulatory body could:

1. Operate with True Independence: Ensure decisions are free from influence by powerful legal firms or internal politics.
2. Embed Public Oversight: Introduce lay representation and public accountability mechanisms to prevent the insular culture that plagues the SRA.
3. Focus on Proactive Regulation: Shift from reactive enforcement to proactive monitoring and support for legal professionals.
4. Prioritise Transparency: Make decision-making processes open and accountable, restoring trust in the regulator.

This is not an argument for increased bureaucracy but for a streamlined, effective regulator that can meet the challenges of modern legal practice, including the fight against economic crime.

Conclusion: A Moment for Change

The SRA’s failings are not new, but the new economic crime objective represents a tipping point. If the SRA cannot adapt—and all evidence suggests it cannot—it should no longer be entrusted with the regulation of solicitors.

The Legal Services Board must take this opportunity to rethink the structure of legal regulation in England and Wales. Without bold action, the fight against economic crime will remain an aspiration rather than a reality, and the public will continue to bear the cost of regulatory failure.

It is time to acknowledge what many in the profession already know: the SRA, as it stands, is not fit for purpose. Let us dismantle it and build something better.

Disclaimer: The views expressed in this article are my own and do not necessarily reflect those of any organisations with which I am affiliated.