The Law Society of England and Wales has outlined its opposition to proposals to create a Single Professional Services Supervisor (SPSS) for anti-money laundering which would sit under the supervision of the Financial Conduct Authority.
In October Chancellor Rachel Reeves announced the creation of a SPSS as part of her ‘blitz’ on ‘pointless admin,’ citing the existence of 23 different supervisors for professional services firms which ‘inevitably leads to inconsistencies in supervision and enforcement and complicates essential collaboration with law enforcement agencies.’
Both the Council for Licensed Conveyancer and the Law Society expressed their concerns when the announcement was made, with Law Society president Mark Evans saying it was ‘vital’ representative bodies continued to have input into ‘shaping… legal sector-wide guidance.’
In its response to the consultation on the reform proposals the Law Society has said it opposes the creation of the SPSS, suggesting there are no proven benefits to the system, which in its view poses ‘major operational and strategic risks for the profession’ and ‘fails to resolve fundamental challenges created by dual regulation.’
The body also raises concerns about unnecessary cost and additional regulatory burden as supervision shifts from the Solicitors Regulation Authority (SRA) to the Financial Conduct Authority (FCA). The proposals do not demonstrate how the switch will ensure a ‘proportionate, risk-based oversight that reflects the realities of legal practice.’
Commenting on its submission, Evans, said:
“The AML reforms risk greater fragmentation, not simplification, and fly in the face of the government’s own growth agenda.
“The speed at which the government is consulting on the reforms is a concern, as these changes will fundamentally reshape AML/CTF oversight across all sectors.
“We remain committed to working with the Treasury to deliver effective, proportionate and sustainable reform. However, meaningful reform cannot be achieved through undue haste. Careful consideration is essential to ensure both the integrity of legal sector supervision and the smooth implementation of any changes.”
Specifically the Law Society add they are concerned about
- How FCA information-sharing powers will protect client confidentiality, avoid duplication, and be supported by clear, sector-specific guidance. This is important in relation to compromising and weakening the confidentiality and integrity of Suspicious Activity Reports and whistleblowing protections.
- Preventing duplicate oversight, as the persistent issues arising from overlapping disciplinary powers are not addressed in this consultation.
- Transition arrangements, which must include grandfathering, phased implementation and close coordination between the FCA, SRA and Treasury.
Mark Evans concluded:
“The AML proposals currently fall short and risk adding complexity without delivering meaningful reform. We urge the Treasury to consider whether a further period of consultation is warranted allowing supervisors, professional bodies and practitioners to contribute before any final decision is made.”
