COLP and COFA: Compliance in Practice

This is highly recommended reading for all in-post compliance officers – and those not yet wearing the cape.

• Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . viiAbout the author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiChapter 1: The requirement to have a COLP and COFAIntroduction to roles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Brief background to the Legal Services Act 2007 . . . . . . . . . . . . . . . . . . . . . . 1Role of the SRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Key extracts from Standards and Regulations that explain the authorisation process for compliance officer role-holders . . . . . . . . . . . . . 5Approval of role holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Approval process for individuals who are not deemed approved . . . . . . 7Individual role-holder and ongoing transparency requirements . . . . . . . 8Withdrawal of approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Temporary emergency approval of a COLP or COFA................... 12Chapter 2: Appointing your COLP and COFAKey extracts from STaRs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Compliance and business systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20The duties of managers in SRA authorised firms . . . . . . . . . . . . . . . . . . . . . . 22Compliance officers – necessary skills, knowledge, experience Compliance officers – time factors and other considerations . . . . . . . . . 25Specific considerations about the COFA role . . . . . . . . . . . . . . . . . . . . . . . . . . 26Can the COLP and COFA be the same person? . . . . . . . . . . . . . . . . . . . . . . . . 27Can we buy in a COLP or COFA? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28Chapter 3: Working with the SRA – understanding entity and risk-based regulationRegulatory objectives and a changed approach to regulation . . . . . . . . 31The impact of the LSA on the work of approved regulators . . . . . . . . . . . 31The SRA’s approach to risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33Regulatory reach over the authorised law firm . . . . . . . . . . . . . . . . . . . . . . . . 34The SRA’s supervision and enforcement work . . . . . . . . . . . . . . . . . . . . . . . . . 35Investigation and enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35What this style of regulation means for the COLP and the COFA . . . . . . 36Enforcement powers against the COLP and COFA . . . . . . . . . . . . . . . . . . . . . 36Chapter 4: The COLP’s essential knowledge and suggested systems and controlsThe extent of the COLP’s responsibilities contrasted with the role of the COLP and the firm’s managers . . . . . . . . . . . . . . . . . . . . 39Key knowledge from the SRA Standards and Regulations of relevance to the COLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41Overview of the STaRs from the COLP’s perspective . . . . . . . . . . . . . . . . . . . 42SRA Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43SRA Codes of Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51Chapter 5: The COFA’s essential knowledge and suggested systems and controlsThe extent of the COFA’s responsibilities contrasted with the role of the COLP and the role of the firm’s managers . . . . . . . . 95Key knowledge from the SRA Standards and Regulations of relevance to the COFA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96SRA Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96SRA Codes of Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99SRA Accounts Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101Chapter 6: Identifying, recording, and reporting non-complianceHow will compliance officers know what they need to know? . . . . . . . . . 126Record-keeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127File-based or central records? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129Centralised or decentralised record-keeping? . . . . . . . . . . . . . . . . . . . . . . . . . . 129Self-reporting by staff or file reviews and supervisory oversight? . . . . . . 129Just STaRs breaches or all complaints data? . . . . . . . . . . . . . . . . . . . . . . . . . . . 130Records of decisions to deviate from the firm’s systems and controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130What information should be included in the record? . . . . . . . . . . . . . . . . . . 130Identifying serious breaches – where to start . . . . . . . . . . . . . . . . . . . . . . . . . . 131The role of the management team in dealing with non-compliance issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131Common breaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133Chapter 7: Compliance officers and international issuesOccasional or temporary practice outside England and Wales . . . . . . . . 135Firms with an “overseas practice” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135How to respond to this section of the SRA Standards and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138Other international regulatory issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139Chapter 8: Behaviours outside of practiceEquality issues outside of practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144Chapter 9: Personal perspectivesThe relationship of the COLP and COFA with the management of the firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147Is the role full-time or part-time?....................................... 147Should the role be held for a fixed period? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148Should there be a deputy or understudy? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148Remuneration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149When and how often the compliance officer should report to the management team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149How will compliance officers work with the management team? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150Insurance and indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151Sources of help . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152About Globe Law and Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153