UK: COLPability – Second Update

Last Updated: 20 December 2012
Article by Richard Harrison

The period for nominations has now passed. The SRA has indicated that the authorisation process is on track. The commencement date for the Compliance Officer for Legal Practice ("COLP") and Compliance Officer for Finance and Administration ("COFA") roles, of 1 January 2013, is now fast approaching with only a few weeks to go. Many firms and their COLPs will be on top of the changes that need to be implemented in light of the regime, however the run-up to Christmas provides a final period for firms to get ready.

Checklist of key matters to address

  • The SRA has reported that a number of firms did not meet the deadline for nomination of its COLP and COFA. Any firm that still has not nominated its compliance officers must do so without delay. Firms who do not comply will face sanctions, and the SRA has indicated that it will begin the process of revoking authorisation for firms without COLPs or COFAs after the deadline, with the exception of firms with whom they are involved in constructive engagement about the issue
  • Ensure all policies and procedures are up to date and are being properly implemented. No doubt many firms will have already carried out a check to ensure that its policies comply with Outcomes Focussed Regulation ("OFR") and the new Code of Conduct and that there are no gaps. Many firms will also have put in place their compliance plans and risk registers. COLPs will have needed to meet with fee earning departments and support heads to satisfy themselves that policies are being complied with and to identify the key risks in each area. To the extent that this process is not complete, firms will need to be satisfied that all systems and processes are fully OFR compliant by the time the COLP regime comes into place. If there are any risk and compliance issues that were parked on the "too difficult" pile, or have not yet been fully and satisfactorily resolved, then it is important to address them before the COLP regime commences
  • Ensure that all reporting lines to obtain necessary information that the COLP needs are now in place. This will include, for example, ensuring the COLP has a means of obtaining relevant information from management, from the money laundering officer, from the risk and compliance department, from HR and from any overseas offices. The COLP must be satisfied that he or she has enough to be able to determine if the firm is compliant with the Code and with relevant legislation including for example that relating to employment, data protection, and anti-money laundering
  • The COLP will hopefully have now set up a system by which members of staff can report compliance failures. This will involve creating a compliance policy including the requirement to report, deciding how staff will be asked to report and to whom (i.e. whether the first report is to be direct to the COLP or via for example, a head of department or member of the team supporting the COLP) and if there is to be a reporting form or template. Firms may wish to implement some form of audit or spot-check process to ensure that reporting is taking place as it should
  • For many firms and their COLPs, at this stage the main area of focus will be alerting staff to the new regime and training them on what is required. There are likely to be difficulties in some areas of the business. Not only is there, in some cases, likely to be a lack of understanding of what constitutes a compliance failing, there may be in some areas a certain degree of reluctance to make reports, as this constitutes quite a shift in mind-set for staff unused to such a requirement. In other areas, there may be a certain amount of over-compliance whilst the regime beds in. Conversely, junior staff members may be reluctant to report a more senior member of staff/partner and the ability to report anonymously may assist here
  • The COLP will need to have devised a means to record compliance failings. This should include a way of determining if there is a pattern of smaller compliance failings, for example by categorising or organising the records in such a way that enables patterns to be easily spotted. Issues of privilege must be considered in relation to the records that are kept. It is suggested that the details of the breach are kept fairly brief and in a factual style. Privilege issues will also need to be considered carefully if the COLP receives a report of a compliance breach and subsequently carries out investigations into the matter. Documents produced as part of an investigation may not be covered by privilege if there is subsequently a claim against the firm arising from the breach
  • COLP support and contingency plans must be in place. In larger firms the COLP will, no doubt, be supported by a properly staffed risk and compliance team and a COLP deputy. In smaller firms the COLP may need to ensure that either he or she will have enough time to perform the role, or that there is the necessary support. Who will take the COLP role whilst the COLP is away on planned and unplanned absences must be considered carefully. Possible issues arising from the role being covered may need to be thought through. For example, the COLP may be a senior individual who attends management meetings or to whom the board would pass on sensitive information. A stand-in for the COLP may be more junior, have less access to such information, and consequently may not learn of something critical
  • COLP protection. If he or she has not already done so the COLP should ensure that they are comfortable that they have appropriate protections in place in the form of a COLP indemnity from the firm and that the firm considers obtaining management liability insurance


There has been a great deal written about how the COLP regime will operate and the difficulties and potential liabilities that COLPs will face. Now that the regime is almost in place, it is important that COLPs use their last few weeks to ensure they have their house in order. We intend to produce a further update reviewing how the role of a COLP has worked out in practice in the first half of next year.

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.

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