The SRA’s decision to pause its proposed changes to the roles of Compliance Officers for Legal Practice (COLPs) and Compliance Officers for Finance and Administration (COFAs) will no doubt be welcomed by many smaller firms, but it also raises a much wider question about the amount of regulatory uncertainty conveyancing firms are currently being asked to deal with.
The proposals were prompted by genuine concerns around governance, oversight and the protection of client money, and nobody should dismiss the importance of ensuring the right controls are in place.
However, for firms trying to plan their businesses, the difficulty comes when significant changes are announced, preparation begins and then the position changes before those new requirements have even arrived.
A particular issue for smaller firms
The SRA had intended to begin introducing its new requirements from early 2027, with separation of compliance roles applying according to thresholds including annual turnover above £600k or firms holding more than £2 million in client money.
That latter figure is particularly important for conveyancing practices because even relatively small firms can hold significant amounts of client money ahead of completions.
For sole practitioners and smaller practices, separating these responsibilities could have created a significant practical problem because they simply do not have the same number of senior people available as larger organisations.
While elements of the compliance workload can be supported externally, the formal appointment and responsibility cannot simply be handed to a third-party consultant, meaning affected businesses could potentially have needed another suitably senior person within the firm.
That of course has consequences for recruitment, cost and the way a business is structured, which is why the decision to pause and reconsider the approach is sensible.
Firms cannot consider every change in isolation
The wider concern is that this is far from the only potential regulatory change conveyancers are being asked to consider.
We have proposals surrounding Interest on Lawyers’ Client Accounts, which have already created considerable concern about the possible financial impact on firms.
We also have the transfer of anti-money laundering and counter-terrorist financing supervision for professional services firms to the FCA, with important questions still to be answered about how those responsibilities will sit alongside the existing regulatory requirements placed upon firms.
Alongside this, there are significant legal and policy changes relating to leasehold and commonhold, while the home buying and selling reform programme itself has the potential to require substantial changes to existing processes. And, we are just a few weeks away from a Budget, which could introduce new laws and changes – indeed we are definitely getting a new scheme for first-time buyers that will need to be understood and covered.
Government departments and individual regulators may understandably look at each of these issues separately, but conveyancing businesses do not have that luxury. The same management teams have to understand what is being proposed, assess the implications, consider staffing and systems, train people and decide whether investment is required, all while continuing to manage transactions and looking after clients.
Uncertainty has a cost
Responsible firms cannot simply wait until the day before a new rule comes into force before considering what they need to do.
When significant regulatory changes are announced, firms begin preparing, and for smaller practices in particular that preparation will often involve the same senior people who are also managing the business, supervising casework and dealing with clients.
If those proposals are subsequently paused, substantially changed or abandoned, the time spent preparing for them cannot be recovered.
We therefore need greater recognition that regulatory uncertainty itself places a burden on businesses, even where the regulation in question ultimately never takes effect.
Focus on changes that improve the process
None of this is an argument against strong regulation, proper financial controls or consumer protection, and a small number of recent cases have quite rightly caused regulators to consider whether existing safeguards are sufficient.
However, proportionality and certainty matter as well. There is an enormous amount of work ahead on home buying and selling reform, and this is where firms should be able to devote significant time and attention because changes such as better upfront information, earlier legal input and improved collaboration across the property market can produce direct benefits and costs savings to support the other initiatives.
Reducing transaction times, fall-throughs, unnecessary enquiries and client complaints would benefit conveyancers, other property professionals and, most importantly, consumers. And when it comes to certainty we do at least know that the Home Buying and Selling Reform programme is supported by the Conservative as well as Labour Party, given that it was originally identified as necessary under a Conservative Government.
The pause to the COLP and COFA proposals is therefore welcome, particularly for smaller firms which could have faced practical difficulties. However, it should also provide an opportunity for Government and regulators to consider the combined impact of everything currently being asked of conveyancing businesses.
Firms need clear rules, sensible timescales and certainty about what they actually need to prepare for, so they can spend less time responding to proposals which may change and more time helping to deliver reforms which can make the home moving process work better.
About the author
Beth Rudolf is director of delivery at The Conveyancing Association. After starting working life as an estate agent, she became a licensed conveyancer and now works with the Conveyancing Association to improve the home-moving process for the consumer.
The views expressed in this article are those of the author and not necessarily those of Today’s Conveyancer.
