The proposal to include UK in-house Lawyers within the financial sector under the Senior Managers and Certification Regime could mean they face double regulation, a topic that has been strongly criticized by many financial firms as well as the Law Society of England and Wales.
Outgoing Law Society Chief Executive Catherine Dixon, was against the decision to include the legal function of an organisation within the new Senior Managers and Certification Regime, she points out that it will add to the regulatory burden because solicitors will be regulated by the Financial Conduct Authority (FCA) as well as the Solicitors Regulation Authority (SRA) which will result in duplication of work and will increase the costs of doing business.
The Senior Managers Regime raises the expectations of Senior Managers across all areas of the firm, and this may now include management of the legal function. Catherine Dixon is not the only one to be expressing concerns; Many firms have raised numerous questions about the inclusion of the legal function. Many feel it has not been made clear enough within the regulation that a Senior Manager must be appointed for overall responsibility of the legal function, while others feel that it is not appropriate for the Senior Managers Regime to apply to the legal function at all.
The most common concern, however, is the proposal by the FCA to designate General Counsel and Heads of Legal as Senior Managers for the purpose of the new Senior Managers and Certification Regime. Most firms believe this decision could post significant changes in culture for in-house legal professionals within financial services. Objections to the inclusion of in-house legal stem from the advisory nature of the role played by General Counsel or Heads of Legal which is not one that typically involves management of a firm’s affairs.
If it is decided that the legal function should remain under the Senior Managers and Certification Regime, it is a regulation that cannot be ignored.
At Mitratech, we offer both Governance Risk and Compliance as well as Enterprise Legal Management software to help you overcome the obstacles you may face in the near future as a result of these changes. We have industry veterans with over 10 years of experience working with legal departments, who will be able to guide you towards the right solution for you. Contact us for more information at marketing@mitratech.com.
Should the #legal function live within the Senior Managers and Certification Regime? #SMR #SMCR
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