SRA under 'unbearable pressure' to award ABS licence

In her final speech as executive director at the SRA, Samantha Barrass has described the "at times unbearable pressure" put on the regulator by a powerful ABS applicant to approve a licence - pressure which was successfully resisted.

Speaking at the Managing Partner Risk Management Conference 2013, Barrass also targeted the Law Society for trying to put the clock back to the "previous millennium" on regulation and go back to the "historic 'chaps regulating chaps'".

And she gave brief but fascinating details of the SRA's current investigations - including "multi-firm conveyancing fraud and money-laundering including the Russian mafia".

On ABS licensing she said the SRA would have got an "easier run" through the Law Society's council if it had agreed to license "only a narrow range of business structures, reducing competition for their members at the expense of providing choice for consumers in a more innovative market".

Barrass went on: "More recently, and at the other end of the spectrum, we have avoided pressure for authorisation to simply be a 'taking names and addresses' exercise.

"And - a fact of life for any regulator - pressure, often implicit, in relation to individual authorisation cases, such as well-connected applicants.

"There is one case, which did not result in an authorisation, where the pressure felt at times unbearable but we had in mind everything we could learn from previous regulatory experience, to put the public interest rather than our own short-term comfort first.

"It would have been easy to go 'oh all right then' but it was not the right thing to do, so we didn't."

Barrass said that, particularly in the first six months of ABS licensing, there was "significant pressure" on the regulator to get as many applications through as quickly as possible.

"Yes, we could have authorised some applications more quickly, we had a lot to learn and we didn't get everything right, particularly in terms of making sure that our approach was not overly bureaucratic.

"Our experience is now bringing to bear a much more proportionate system. Lower risk applications now go through much more quickly, but it is absolutely proper that more complex applications are properly reviewed."

On the Law Society, Barrass said Chancery Lane's response to the MoJ's consultation on regulation "sought primarily to seek to wind the clock back to the previous millennium - dismissing Competition in the Professions, Sir David Clementi's review; the Legal Services Act and, more importantly, the major public interest concerns that led to them, as a momentary blip in the historic "chaps regulating chaps".

In contrast she said the SRA's response "set forward a range of issues to be addressed in the wider public interest which, if taken up by government, would ultimately see the end of regulators, such as the SRA, narrowly based upon individual professional titles."

Barrass said that, by modernising its approach on financial stability, the regulator had recently uncovered "multi-firm frauds involving multi-million pound overseas investment funds, multi-firm conveyancing frauds and money-laundering involving the Russian mafia".