SRA setback over higher fining powers
Proposals rejected by MoJ would 'benefit firms'
The SRA has suffered a temporary setback in its attempt to secure higher fining powers against traditional law firms after the MoJ refused to raise them in line with those applicable to ABSs.
In May the regulator applied to the Ministry of Justice to have the maximum fine it can impose on law firms raised from £2,000 to £250m.
“We do not consider a strong enough case has been made to change the current fining powers by such a large amount,” a Ministry of Justice spokesman told Solicitors Journal.
But he said that discussions with Southampton Row would continue with a view to agreeing a mutually acceptable ceiling.
SRA chief executive Anthony Townsend responded with equal openness. “We welcome further dialogue with the MoJ on this issue,” he said.
In a separate statement, the SRA rejected arguments that an increase in its fining powers was not necessary because the SDT could already impose unlimited fines.
“Our proposals would also benefit firms that have committed breaches which deserve a punishment more substantial than a £2,000 fine but are not so serious as to warrant a suspension or strike-off,” the statement said.
The SRA’s average costs in bringing an SDT case are around £8,000, which, added to the current maximum fine of £2,000, can result in law firms facing a total bill of £10,000 which the regulator will recover from the firm.
This, the SRA says, was justification enough to allowing it to levy much higher fines than at present.
In March last year the LSB increased the level of fines frontline regulators could levy on ABSs to £250m, leaving the amount that could be levied on individuals at £50m.
The following month, the SRA said it should be able to levy the same level of fines on all legal services providers, whether ABSs or traditional firms, to ensure a level playing field.
At the time the Legal Services Board agreed that there should be a “substantial increase” in the upper limit.
The Law Society has argued against the move, pointing to the fact that the SDT can already impose unlimited fines on law firms and lawyers.