Proactive regulation September 27, 2012 Samantha Barrass Executive Director, SRA

What must legal regulation achieve? consumer protection public confidence Reactive -v- proactive Redress: but something has already gone wrong!

Proactive regulation SRA experience generic themes

SRA since 2011 The regulatory focus proactive vs reactive efficient and effective use of regulatory resources 11,000 firms 140,000 individuals risk- based focused on outcomes, rather than inputs

Two important foundations Primary responsibility for managing risk? the firms most senior persons in the firm SRA time spent on: those who cannot and/or will not deliver competent ethical legal services those who can and will, but need SRA support

The Regulatory Tools Formal framework “The Handbook” conduct of business requirements education and training requirements Operational framework Authorisation Supervision: constructive engagement Enforcement: credible deterrent

Risk Centre Authorisation Supervision Formal Investigation Legal & Enforcement Post Enforcement Legal advice and support Policy and standard setting

Objectives for the proactive regulator 1.Identify which regulatory risks you care about. 2.Set up a system to alert you to crystalising risks. 3.Proportionately allocate resources against risks. 4.Make sure decision-making on how to control those risks is transparent, fair and consistent.

Challenges for the proactive regulator Staff Firms Powers Quality of information and systems Still need to “react”