On 26 July 2017, the FCA published Consultation Paper 17/25: Individual accountability: Extending the Senior Manager & Certification Regime (SM&CR) regime to all FCA firms (CP17/25).
The Law Society has now published its response to CP17/25 reiterating its position on the importance of excluding the legal function from the SM&CR regime. The Law Society argues that including the legal function within the regime raises significant risks for clients and solicitors including:
- erosion of Legal Professional Privilege;
- in-house lawyers being placed in positions of conflict with their employers; and
- the prospect of dual regulation for some lawyers.
The Law Society states that the inclusion of the legal function within the SM&CR regime has the potential to put the lawyer in a conflict of interest situation with their employer and could impair that lawyer’s ability to provide full and frank legal advice to his/her clients. Furthermore, including the legal function within the SM&CR regime creates the possibility of dual regulation which can cause additional and unnecessary costs to be borne in complying with difference regimes.
The Law Society therefore calls the FCA to:
- in the short-term, continue with its policy of taking no enforcement action against lawyers who are included within the SM&CR until the issue has been resolved; and
- in the medium-term, consult fully on the removal of the legal function from the SM&CR.
View Law Society reiterates view to exclude legal function from SM&CR, 14 November 2017