UK: Outcomes-Focused Regulation – A "Naked Road" Scheme For The Legal Profession?

Last Updated: 20 April 2011
Article by Andrew Blair and Geoffrey Shreeve

As the SRA continues with its timetable to implement outcomes-focused regulation (OFR), it has recently published its new Handbook, containing a principles based Code of Conduct.

The SRA's move from requiring compliance with detailed rules to the spirit behind certain principles is not unprecedented.

In April 2004, Seend, a village in Wiltshire, removed all markings from its roads. In January 2005, it was reported that accidents in the village had dropped by a third and vehicle speed had fallen by five per cent. It seemed that the psychology underpinning the experiment had struck at a truth of human behaviour. As the SRA prepares, in October 2011, to implement a scheme requiring firms to ensure that they abide by principles of good practice rather than avoid breaching rules, can we expect to see an improvement in the profession's management of risk, or will firms be left in doubt as to what exactly the SRA requires?

The new Handbook for the profession (which is subject to approval by the Legal Services Board) will be in force from 6 October 2011 (with some phased implementation from August) and brings together in one place standards and regulations applying to firms including sections and guidance on, amongst other matters, accounting and PII. The Handbook and Code will also apply to alternative business structures regulated by the SRA when they are permitted. The Code is structured so that the profession must comply with mandatory principles and deliver on mandatory outcomes. To do so, non-mandatory indicative behaviours (IBs) are provided to assist. Some sections of the Code also contain notes. The SRA has also published a quick guide to OFR and the new Handbook, which in particular contains some Q&As on achieving outcomes.

The publication of the new Code follows a consultation process that suggested that the profession was broadly supportive of the changes, but considerable uncertainty remains as to how the scheme will work in practice. A recent Legal Week survey suggested that half of City partners did not understand the move towards principles-based regulation. One particular fundamental concern has been the role of the IBs. In response to criticism that the SRA might treat non-compliance with the IBs as failure to achieve the outcomes hence making the IBs de facto rules, the SRA confirmed that firms have the option to achieve the outcomes in other ways. It amended the language used in the Code of Conduct to make clear that acting in accordance with the IBs "... may tend to show that you have achieved these outcomes and therefore complied with the Principles" (our emphasis). At the other end of the scale some commentators have suggested that the new Code does not give enough guidance, and that introduction of the word "may" means that even complying with the IBs will not be enough to ensure a firm is not in breach of the Code.

Much will of course depend on the SRA's interpretation of the Code and its practical approach to enforcing it. The SRA has emphasised that OFR is not "light touch" regulation, but will provide for more efficient, flexible and cost-effective enforcement. To apply the "naked road" metaphor, there may be no markings on the road, but each driver must know the applicable laws and the police will still arrest a driver for not complying with the law.

The SRA is to place an emphasis on dialogue and cooperation as part of a "risk based, proportionate and targeted" approach to authorisation, supervision and enforcement. The SRA envisages that firms will have a more open and constructive relationship with it and states that firms that are already well managed and providing a good service have nothing to fear.

The flexibility of this new approach is considered to be particularly essential to allow the SRA to effectively regulate all firms, from the high street practitioner to the Magic Circle. Some larger commercial firms have been critical of the outgoing detailed rules, which they considered were often focused on the smaller client, and were being enforced by a regulator that they considered did not understand their business. At the same time the approach is intended to make parts of the profession self-regulating allowing the SRA to focus on firms that do not provide a proper standard of service.


An aspect of the new regime that met with particular resistance from some during the consultation stages is the introduction of a requirement for firms to appoint a compliance officer for legal practice (COLP) and a compliance officer for finance and administration (COFA) contained in Rule 8.5 of the Authorisation Rules. The individual fulfilling the COLP role will have wide obligations to take all reasonable steps to ensure the authorised body complies with its authorisation and its statutory obligations in relation to carrying on authorised activities, to record any failure to comply and make such records available to the SRA on request and to report any material failure (taken on its own or as a pattern) to the SRA as soon as reasonably practicable. The drafting of the Rules has been amended to some degree to reflect concerns raised. For example, it is now specified that a firm must have suitable arrangements in place to allow the COLP and COFA to discharge their role, and it is now clearer that the COLP is not responsible for breaches of all statutory law. There are, however, a number of issues remaining. The burden of compliance responsibility remains on one individual, and it is not clear what is required in all respects from that person, for example what are "reasonable steps". The SRA's guide contains a timeline for when different bodies must nominate a COLP and COFA and from when they must fulfil their obligations.


Although the greater flexibility available under the new rules will no doubt be welcomed, especially by larger firms, we will have to see whether the SRA's new approach delivers the supportive environment required to allow firms to implement the rules in ways that are an improvement for them and their clients.

Perhaps the greatest immediate challenge for the SRA is likely to be dealing with the sheer weight of queries from practitioners as they seek to ensure compliance with the outcomes. A fundamental difference between OFR and the small traffic scheme in Seend is that when the markings were removed from the roads, all the rules stayed the same.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.