News In Focus
Society consults on practice rule changes
Member solicitors are being consulted by the Law Society of Scotland on a number of proposed practice rule changes.
Amending practice rules covering aspects of money laundering and complaint handling will be put to a special general meeting to take place on 15 December 2017. The third change relates to the possible introduction of new practice rules at next year's annual general meeting, currently scheduled for May 2018.
As a consequence of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, which came into force on 26 June 2017, the Society is changing the way it supervises members’ anti-money laundering compliance. This will become increasingly risk based so as to include the ability to deliver supervision in different ways, including traditional inspections. The Society will carry out more risk assessments of practice units, deliver new types of review (desk based and thematic), and focused reviews on specific topics such as trust and company service work by a practice unit (an article on this last point is in the September 2017 Journal).
Certain amendments and deletions are made to rule B6, and a new rule B9 sets out a duty to comply with the Money Laundering Regulations, records to be kept, delivery of certificates of compliance to the Society and the carrying out of inspections and investigations.
On complaints handling, the amendments follow through a recommendation of the Scottish Legal Complaints Commission that the Society consider changing rule B5.5.1, to include a requirement for client relations managers not only to maintain a central record of complaints received by their practice unit, but also to ensure first that that record captures a minimum range of information; and secondly, to deliver copies of the central record to the SLCC on demand.
The amending rules also add a general duty (new rule B1.16) to deal with the Society in an open, timely and co-operative manner, so as to enable the Council to properly exercise and fulfil its regulatory functions.
The proposed new rules on raising concerns, for discussion at the 2018 AGM, follow a consultation by the Society in 2015 on various recommendations made by KPMG in their report on the Guarantee Fund (now known as the Client Protection Fund), one of which was that consideration be given to introducing a requirement on solicitors to report suspicions of dishonest behaviour within the profession to the Society.
Responses indicated strong support from members in favour of a reporting policy for financial irregularities and/or mis-management, and the view being expressed that all members of the profession should report any suspicious or dishonest behaviour.
Views are now sought on a proposal to introduce two new practice rules into the standards of conduct at rule B1. There would be a requirement on a solicitor who knows of, or has reasonable grounds to suspect, serious misconduct by any "regulated person" to report that to the Society as soon as reasonably practicable. There would be a further duty not to subject to any detrimental treatment a person who has made such a report in good faith.
Draft guidance is published along with the draft rules.
Responses on the amending practice rules for the special general meeting should be submitted by email to SGM2017Consult@lawscot.org.uk no later than noon on Wednesday 11 October. Responses on the proposed new rules for the AGM should be submitted by email to RaisingConcernsConsult@lawscot.org.uk no later than noon on Friday 10 November.
Welcoming the consultations, Neil Stevenson, chief executive of the Scottish Legal Complaints Commission, commented: “We are very pleased to see these consultations, in particular the recognition of our report on complaints records and the constructive way the Law Society of Scotland has engaged with our recommendations. This is an area where we have previously flagged opportunities for improvement and I know it has also been raised by our independent consumer panel. Our belief is that complaints can be a valuable learning tool for commercial success and the draft rule reflects that.
“We’re also pleased that the LSS is consulting on a duty to report potentially harmful misconduct that involves dishonesty or serious financial impropriety. This was an issue we flagged previously in Reimagine Regulation, our paper on legislative change. We know that it is only a tiny minority of solicitors who engage in such conduct, but the impacts can be significant. We welcome the increasingly risk based approach the LSS has taken to this and to the anti-money laundering rule change consultation.”
Click here for further information and to access the draft rules. Enquiries can also be directed to the respective email addresses above.