Question of ethics

June 2012

Featured in SRA Update Issue 25, June 2012

Appointing a "deputy" COLP or COFA

Q. Is it advisable to appoint a deputy COLP or COFA in case one of the compliance officers leaves or is absent?

The only requirement under rule 8.5 of the SRA Authorisation Rules 2011 ("AR") is to appoint a COLP or a COFA. Such appointments must first be approved by the SRA under Part 4 AR. While compliance officers may delegate their day-to-day functions, they cannot delegate their responsibility for meeting their obligations under rule 8.5. Accordingly, we do not formally recognise the role of a "deputy" and will not approve such persons unless, and until, an application is made for them to become the COLP or COFA.

From a practical point of view, however, there may be good reasons to appoint a deputy compliance officer. For example, guidance note (xi) to rule 8 AR highlights the need to deal with the unexpected absence of a compliance officer. Depending on the size and complexity of your firm, appointing a deputy may be an effective way of controlling the risk to compliance in such circumstances and contribute towards achieving outcomes (7.2) to (7.4) of our Code of Conduct 2011.

However, while we accept that compliance officers will sometimes be absent (e.g. because of holidays or illness), you will need to consider carefully whether the firm is still compliant if the compliance officer is unable to fulfil his or her responsibilities for more than a short period and, thus, whether this triggers the need to notify the SRA under rule 8.7 AR. If so, then you will need to apply for a new compliance officer to be appointed, even if only on a temporary basis (see rule 18 AR on making an application for temporary emergency approval).