Law firm compliance news

January 2026

All change at the SRAAll change at the SRA Accountant’s reports Concentration of ownership Improving oversight

Welcome to the third instalment of our quarterly law firm compliance update series. If there are areas of focus that you would like to see featured, please do let us know.

All change at the SRA

The SRA hosted a webinar on 11 December 2025 that set out the terms of reference for their consultation on protecting client money.

As they alluded to at their COLP/COFA conference in October 2025, they have announced a second phase of consultation. While we expected there to be three areas of focus, they are currently consulting on two, with a third to follow in the new year.

Accountant's reports

The 2025 spot checks identified non-compliance by around 10% of law firms reviewed, including not obtaining AR1s when not exempt and late filing of qualified AR1s or non-filing of qualified AR1s.

As such, the SRA are now consulting on:

Should all reports for non-exempt firms be filed whether qualified or unqualified? OR Should firms make a mandatory annual declaration that they have obtained or are exempt from obtaining an AR1? Or should reporting accountants submit reports directly to the SRA?

Fixed financial penalties for late submissions or incomplete declarations.
Updated guidance for reporting accountants to obtain bank confirmation letters.
The previous suggestions to introduce mandatory rotation of reporting accountants have been dropped.

Concentration of ownership, management and compliance roles in one person

One of the findings of the LSB report was that concentrated role holding is a ‘significant risk’ and as such, the SRA are consulting on introducing safeguards to mitigate the risk of dominant individuals in firms.

Should unilateral decision makers in firms be prohibited from holding COLP/COFA roles.
Risk thresholds for separation of roles.
Some exemptions for sole-practitioners.

Improving oversight of firms changing profile

The SRA will be launching a further consultation next year, looking at internal risk indicators, information and notification requirements and risk-based scrutiny arrangements.

The consultation has now launched and can be accessed here.

The deadline to respond is 12pm Friday 20 February 2026 – don’t delay, start compiling your response now. Responses will be published, unless requested otherwise.

Crowe will be submitting our own response to the consultation, but it is important that you have your say, please do get in touch if you have any queries.