COLP & COFA Can’t keep up?

1. COLP & COFACan’t keep up? Allison Wooddisse & Emma Dickin Summer 2013 allison.wooddisse@lexisnexis.co.uk emma.dickin@lexisnexis.co.uk Pslpracticecompliance@lexisnexis.co.uk

2. Agenda • COLP and COFA: what does the job involve? • What do you have to comply with? • Top ten compliance areas • Risk register and risk management policy • Top ten routine compliance activities • Identifying and managing compliance failures

3. COLP and COFA: What does the job involve?

4. 3 duties • Take all reasonable steps to ensure compliance: • COFA—SRA Accounts Rules • COLP—everything else • Report compliance failures to SRA • material—as soon as reasonably practicable • non-material—annually • Record compliance failures & make available to SRA on request

5. What do you need to comply with?

6. Two sources of regulation

7. Top ten compliance areasIgnore at your peril!

8. Our compliance top ten • Governance* • Compliance failure process • Risk management • Compliance Plan • Financial management • Client care • Outsourcing • Conflicts & confidentiality • Financial crime* • Commissions & financial benefits / referrals & fee sharing

9. Risk ManagementRisk register and risk management policy

10. Step 1: The risk matrix? • Risk = impact x probability • If a particluar event happened: • The risk matrix

11. Step 2: The risk register • What is it—document listing the risks your firm faces • How to formulate: • Identify your risks • Categorise each risk: • strategic (could jeopardise the future of your business) • operational (could affect the day to day running of your business) • regulatory (could get you into trouble) • Score each risk (1-9: impact x probability) • Decide how you will mitigate or manage each risk • Record in a spreadsheet • Review at regular intervals

12. Simple risk register

13. Risk register exercise • See workbook, page 3-7

14. Step 3: Risk management policy • What is risk and why does it matter • Your general approach to risk management (eg to identify, assess, manage, mitigate and transfer risk) • Who is responsible for risk management • Your processes for identifying, reporting and evaluating risk – eg compliance failures, file audits, complaints, staff feedback • How you manage strategic, operational and regulatory risk – via your risk register etc • How you will monitor and update your risk management policy – at least annually • One we made earlier, see p14 in your workbook….

15. Top ten compliance activities

16. Top 10 routine compliance activities * Material compliance failures to be reported as soon as reasonably practicable—cannot wait for monthly review of register

17. Identifying and managing compliance failures

18. Recording compliance failures • Duty: • keep a record of all compliance failures, and • make this record available to the SRA on request • How? • No prescribed way of recording compliance failures • In a way that allows the COLP/COFA to: • monitor overall compliance with regulatory and statutory obligations • assess effectiveness of systems and controls • identify and report a material failure or pattern of failures

19. Simple COLP compliance failure register

20. What is a material compliance failure? • Compliance failure can be material either: • taken on its own, or • as part of a pattern/trend of compliance failures • No definition of material failure, but should take into account all relevant factors, including: • the detriment or risk of detriment to clients • the scale of the issue • the overall impact on the firm, its clients and third parties • the extent of any risk of loss of confidence in: • firm, or • the provision of legal services generally

21. Compliance failure exercise • See workbook, page 9

22. Examples of compliance failures HEALTH WARNINGS These are possible examples only and not definitive guidance. Each compliance failure must be assessed against the SRA’s list of factors

23. Examples of compliance failures HEALTH WARNINGS These are possible examples only and not definitive guidance. Each compliance failure must be assessed against the SRA’s list of factors

24. Examples of compliance failures HEALTH WARNINGS These are possible examples only and not definitive guidance. Each compliance failure must be assessed against the SRA’s list of factors

25. Examples of compliance failures HEALTH WARNINGS These are possible examples only and not definitive guidance. Each compliance failure must be assessed against the SRA’s list of factors

26. Examples of compliance failures HEALTH WARNINGS These are possible examples only and not definitive guidance. Each compliance failure must be assessed against the SRA’s list of factors

27. Examples of compliance failures HEALTH WARNINGS These are possible examples only and not definitive guidance. Each compliance failure must be assessed against the SRA’s list of factors

28. Monitoring compliance failures • Why? • How often? • How? (a) Review data from Compliance failure register (b) Findings: • Register up to date? • Identified new material compliance failures, esp trends • Uncovered any complaints / suspected negligence / reportable to another regulator • Training needs • Remedial, preventative or other action (c) Set action points See our COLP/COFA compliance failure monitoring records, p26-33….

29. Free WebEx programme* *Attendance at any of these sessions can count towards your 75% ‘DIY’ CPD points! To reserve your space please contact the Practice Compliance team pslpracticecompliance@lexisnexis.co.uk

30. Looking for a virtual compliance assistant?

31. Just a few of the topics covered…

32. The what, the why and the how…

33. Freebies • Contact us at pslpracticecompliance@lexisnexis.co.uk • if you would like a copy of: • Any of the documents we have referred to today • Comply or Die: compliance self help guide • Compliance Plan Kit (build your own templates) • Governance templates • COLP & COFA job description templates • Financial management test