Principles and Risk-Based Regulation Flashcards
(12 cards)
How many SRA Principles must all authorised individuals and firms uphold?
A. Six
B. Seven
C. Eight
D. Five
B. Seven
Explanation: The SRA Standards & Regulations 2019 set out seven overarching ethical Principles that apply to every authorised person and firm.
Which Principle requires solicitors and firms to “Act with honesty”?
A. Principle 3
B. Principle 2
C. Principle 4
D. Principle 6
C. Principle 4
Explanation: Principle 4 explicitly mandates that all regulated individuals and bodies must act with honesty in their professional dealings.
If Principle 1 (rule of law) conflicts with Principle 7 (best interests of each client), which Principle prevails?
A. Principle 1 – rule of law & proper administration of justice
B. Principle 7 – act in the best interests of each client
C. They carry equal weight
D. The firm decides case by case
A. Principle 1 – rule of law & proper administration of justice
Explanation: Public-interest Principles (e.g. Principle 1) override client-focused Principles when they come into conflict.
Under the SRA’s risk-based regulation, firms must:
A. Apply identical controls across all areas
B. Focus solely on client care risks
C. Delegate risk management to external auditors
D. Tailor systems and controls to their specific risk profile
D. Tailor systems and controls to their specific risk profile
Explanation: Firms are required to identify where non-compliance would cause greatest harm and implement proportionate training, supervision and monitoring.
A conveyancing practice doubles its case load. In line with the SRA’s risk-based approach, it should:
A. Maintain existing controls only
B. Publish a revised Risk Outlook
C. Reassess and strengthen its controls (e.g. training, audit) proportionately to the increased risk
D. Transfer new work to a non-regulated office
C. Reassess and strengthen its controls (e.g. training, audit) proportionately to the increased risk
Explanation: As a firm’s exposures change, it must update its tailored systems and controls to manage emerging risks.
hich of the following best illustrates the SRA’s risk-based regulation in practice?
A. Randomly auditing a subset of files each year
B. Applying the same compliance checklist to all firms
C. Outsourcing all AML checks to a third party
D. Embedding COLP/COFA oversight targeted at identified high-risk areas
D. Embedding COLP/COFA oversight targeted at identified high-risk areas
Explanation: Appointing and training dedicated compliance officers where risks are highest exemplifies proportionate controls.
What is the purpose of the SRA’s annual Risk Outlook?
A. To set practising fee levels
B. To identify emerging sector-wide risks and outline mitigation plans
C. To replace individual firm risk assessments
D. To rank firms by profitability
B. To identify emerging sector-wide risks and outline mitigation plans
Explanation: The Risk Outlook maps out threats across the profession and explains how the SRA will address them.
A firm’s AML controls repeatedly fall short. Under risk-based regulation, the firm must:
A. Shut down all high-risk practice areas
B. Document and remediate AML weaknesses proportionate to their severity
C. Report directly to the Legal Services Board
D. Withdraw from regulated activities entirely
B. Document and remediate AML weaknesses proportionate to their severity
Explanation: Firms must monitor and strengthen controls in areas where compliance failures pose greatest harm.
Which function is not part of the SRA’s regulatory role?
A. Setting professional standards and Principles
B. Authorising solicitors, firms and ABSs
C. Negotiating legal fee levels between firms and clients
D. Enforcing the Codes and referring serious breaches to the SDT
C. Negotiating legal fee levels between firms and clients
Explanation: The SRA sets and enforces regulatory standards but does not involve itself in fee negotiations.
Under the risk-based regime, which individual must oversee a firm’s compliance systems?
A. The firm’s head of marketing
B. A non-lawyer finance officer
C. A COLP (Compliance Officer for Legal Practice) or equivalent
D. An external auditor only
C. A COLP (Compliance Officer for Legal Practice) or equivalent
Explanation: Every authorised body must appoint and empower a COLP (and COFA) to implement and monitor tailored controls.
What immediate power does the SRA have if it believes a firm poses a serious risk to clients?
A. Close the firm’s bank accounts
B. Conduct an emergency intervention and shut down the practice
C. Refer the firm to the Legal Ombudsman
D. Impose a public reprimand only
A. Conduct an emergency intervention and shut down the practice
Explanation: The SRA can intervene directly, including emergency practice closure, to protect client interests.
Principle 6 of the SRA Principles requires firms to:
A. Uphold public trust and confidence
B. Act with independence
C. Encourage equality, diversity & inclusion
D. Act in the best interests of each client
C. Encourage equality, diversity & inclusion
Explanation: Principle 6 mandates that firms proactively promote a diverse and inclusive working environment.
