The 5MLD applies to all firms whose work areas currently fall within the scope of the MLR. It is not as big a change as the previous overhaul in 2017.

Main changes that will be most relevant to solicitors and law firms are outlined below:

1. Additional due diligence requirements when dealing with high risk jurisdictions, including what is known as ‘super-enhanced due diligence.’
2. Reliable electronic verification systems are now explicitly permitted to be used in customer due diligence.
3. More certainty over Politically Exposed Persons (‘PEP’). The government is required to give the profession information about the PEP worthy roles and positions.
4. Increasing transparency in beneficial ownership through expansion of the registration requirements for companies and trusts, and the availability for their inspection. This will include an obligation on solicitors to notify Companies House of any discrepancies between the official persons of significant control register and the information held by a firm.
5. The legislation also means the SRA are changing some of their processes. For example, new applications for Beneficial Owners, Officer and Managers (known as BOOMs) will now need to provide a basic Disclosure and Barring Service check which shows applicants do not have any of the criminal convictions that would prevent approval.

The Regulatory Position

Although the SRA previously indicated that they would take enforcement action against any firms who did not comply with the 5MLD, they have now changed their stance and will take the limited time that firms have had to prepare for the new requirements into account when carrying out enforcement work. The Legal Sector Affinity Group is also currently drafting updated guidance on the 5MLD, which will then have to be approved by the Treasury. This may take a number of months to implement.

What should your firm be doing about the 5MLD?

We have outlined some practical tips that you can implement now:

1. Your firm should review its current anti-money laundering policy and risk assessment so that any of the new changes are recorded in these policies.
2. Revised copies of the polices should be circulated to members of staff.
3. How are you monitoring compliance? Are fee earner file reviews identifying any major issues?
4. Consider refresher training for your staff.
5. Keep an eye on further guidance that may be published by The Legal Sector Affinity Group as this may trigger another review of your policies and procedures.

If your firm requires support in implementing any of the above please contact us today.

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Lexcel accredited practices undergo rigorous independent assessment every year to ensure they meet required standards of excellence in areas such as client care, case management and risk management.

Outlined below are some of the benefits in obtaining the Lexcel standard:

• An effective risk management framework could result in fewer client complaints;
• Increased client retention and better customer service;
• Obtain a competitive advantage over those firms that are not accredited;
• A reduction in professional indemnity insurance premiums;
• Operational efficiencies for your staff and processes;
• Firms have been able to secure new business following an accreditation.

As Law Society accredited Lexcel consultants, Compliance Legal can assist your firm in gaining the initial accreditation followed by support in annual reassessments. Contact us today to see how we can help.

The post Should your firm become Lexcel accredited? appeared first on Compliance Legal.

A recent report has concluded that large firms are now losing their talent to smaller competitors.

The Bellwether Report 2019: Stress in the Legal Profession found that despite numerous challenges, confidence in the legal market continues to grow to an extent that solicitors from large firms are now looking to move smaller practices. The benefits identified include the ability to remain in control, improved client experience and a reduction in administrative process.

The report also found that the main challenges facing solicitors were:

• over 80% expressed a concern that, if they did not have sufficient capacity, they would have to turn work away;
• 75% felt that the size of a small firm could be wrongly interpreted by some clients as lacking credibility;
• 90% were of the view that growing the business would be a major hurdle.

It is clear that there are numerous benefits in working within a smaller firm. With the advent of the freelance solicitor (or what will officially be called an ‘independent solicitor’) later this year, the legal services market will open itself up to a new type of business model.

If you are considering leaving your current role to set up or work for a smaller firm, Compliance Legal can help ensure the process of applying for SRA approval runs smoothly and efficiently.

We can also assist in identifying potential areas of growth and help develop your business in an increasingly changing legal services market. Contact us today for a free consultation.

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What do the Transparency Rules involve?

The Rules require firms to publish price and service information in the areas of conveyancing (residential); probate (uncontested); motoring offences (summary offences); immigration (excluding asylum); employment tribunals (unfair/wrongful dismissal); debt recovery (up to £100,000) and licensing applications (business premises).

Price information must be presented in a clear and easy to understand format. A firm must also provide a total cost, if this is not possible provide an average or range of costs; explain the basis of charges, including any hourly rate or fixed fees; highlight likely disbursements, and their costs; be clear on whether VAT is included and, for conditional or damages-based fees, explain when clients may have to make payments.

For service information a firm must explain what services are included for the quoted price; highlight any services not included within the price, which a client may reasonably expect to be; include information on key stages and typical timescales of these and publish the qualifications and experience of anyone carrying out the work and of their supervisors.

Despite clear guidance issued to the profession, the recent review of firm websites by SRA found the following:

• From those firms that had live websites, they were either fully complying (25%) or partially complying (58%).
• 30% of the firms offering immigration services failed to comply in any way. This is a clear breach of the Rules.
• The most common areas of concern included a failure to display complaints information, not specifying the amount of VAT applied to costs or a failure to display information on key stages or likely timescales.
• Many firms were not providing a description or estimated costs of likely disbursements, and again not specifying where VAT applied.

The SRA has announced that they have given 78 firms who were not complying a two month grace period before regulatory action is considered. A further web sweep of firms is likely to be carried out later this year.

If you are in any doubt as to what you need to include on your website, Compliance Legal can assist. From the firms that have instructed us the most common themes emerging include a lack of time and understanding of the requirements, as well as issues encountered with individual website designers.

Compliance Legal can project manage your firms transparency requirements, and our web designing team will also review your site to ensure that it is compliant with the Rules. For firms who do not have a website our teams can design and delivery bespoke solutions to meet your requirements.

If you would like further assistance with this then please contact us today.

The post Is your firm compliant with the Transparency Rules? appeared first on Compliance Legal.