SRA Handbook

SRA Overseas Rules 2013

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SRA Overseas Rules 2013

Rules dated 30 August 2013 made by the Solicitors Regulation Authority Board under sections 31, 32, 33A, 34, 79 and 80 of the Solicitors Act 1974, sections 9 and 9A of the Administration of Justice Act 1985 and section 83 of, and paragraph 20 of schedule 11 to the Legal Services Act 2007, with the approval of the Legal Services Board under paragraph 19 of Schedule 4 to the Legal Services Act 2007 regulating the conduct of solicitors and their employees, registered European lawyers and their employees, registered foreign lawyers, recognised bodies and their managers and employees and licensed bodies and their managers and employees.

Part 1: The Overseas Principles

Rule 1: Overseas Principles

1.1

You

(a)

as a regulated individual practising overseas must ensure that you; or

(b)

as a responsible authorised body must ensure that your overseas practice, and individual managers, and members and owners of your overseas practice (who are, for the purposes of these rules, 'those for whom you are responsible');

comply with the Overseas Principles stated below.

1.2

Each of the Overseas Principles stated below, is supplemented by a note to assist individuals and bodies to determine how best to comply with each Principle. These notes do not form part of the Principles and are for guidance only.

1.3

Overseas Principle 1: You must uphold the rule of the law and the proper administration of justice in England and Wales.

Guidance note

(i)

Your obligations to clients, the court and third parties in England and Wales with whom you are dealing on behalf of your clients are unaffected by the location outside England and Wales from which you practise or by the location of your overseas practice.

1.4

Overseas Principle 2: You must act with integrity.

Guidance note

(i)

Personal integrity is central to your role as the client's trusted adviser and should characterise all of your professional dealings with clients, the court, other lawyers and the public, wherever they are being conducted. You should use your judgment when considering how best to maintain your integrity at all times and avoid any behaviour outside England and Wales which undermines your character and suitability to be an authorised person. A responsible authorised body should ensure that its overseas practices observe comparable standards.

1.5

Overseas Principle 3: You must not allow your independence or the independence of your overseas practice to be compromised.

Guidance note

(i)

"Independence" means your own independence and that of your firm and your overseas practice, and not merely your ability to give independent advice to a client. You should avoid giving control of your overseas practice to a third party beyond any local legal or regulatory ownership requirements.

1.6

Overseas Principle 4: You must act in the best interests of each client.

Guidance note

(i)

You should act in good faith and do your best for each of the clients for whom you are (or your overseas practice is) acting. In particular, you should follow the local legal or regulatory requirements of the jurisdiction in which you or your overseas practice are practising in relation to confidentiality and conflicts of interest. If no such requirements exist, you should be guided by what you consider to be the best interests of each client in the circumstances.

1.7

Overseas Principle 5: You must provide a proper standard of service to your clients/the clients of your overseas practice.

Guidance note

(i)

You should provide a proper standard of client care and work. This includes exercising competence, skill and diligence and taking into account the individual needs and circumstances of each client as well as the particular requirements and circumstances of the jurisdiction in which you are working. If your client meets the definition of a complainant under Section 128(3) of the Legal Services Act 2007 or the Legal Services Act 2007 (Legal Complaints) (Parties) Order 2010, you should inform the client who is regulating the legal services you or your overseas practice is providing to the client, what client protections are in place and whether they have the benefit of professional indemnity insurance or other indemnity.

1.8

Overseas Principle 6: You must not do anything which will or will be likely to bring into disrepute the overseas practice, yourself as a regulated individual or responsible authorised body or, by association, the legal profession in and of England and Wales.

Guidance note

(i)

This includes any behaviour which occurs within or outside your professional practice which undermines your own reputation, that of the practice within which you are a manager or solicitor employee, or the wider reputation of the legal profession in and of England and Wales.

1.9

Overseas Principle 7: You must comply with your legal and regulatory obligations in England and Wales, and deal with your regulators and ombudsmen in England and Wales in an open, timely and co-operative manner and assist and not impede any authorised person or authorised body practising in England and Wales in complying with their legal and regulatory obligations and dealings with their regulators and ombudsmen.

Guidance note

(i)

As a responsible authorised body, you should ensure that you, and those for whom you are responsible, comply with all of the reporting and notification requirements that apply to you and respond promptly and substantively to communications. You should ensure that you (and those for whom you are responsible) do not cause, contribute or facilitate a failure to comply with the SRA's regulatory arrangements by any authorised person or authorised body practising in England and Wales. Regulated individuals practising overseas should assist their responsible authorised body to comply with its regulatory obligations to the SRA.

1.10

Overseas Principle 8: You must run your business/the business of your overseas practice or carry out your/their role in the business effectively and in accordance with proper governance and sound financial and risk management principles.

Guidance note

(i)

As a responsible authorised body you are required to ensure that your relations with your overseas practice accord with sound governance, financial and risk management principles. You should ensure that those for whom you are responsible under these rules assist you in meeting your obligations to the SRA in relation to managing any risks that your overseas practice might pose to your operations.

1.11

Overseas Principle 9: You must run your business/the business of your overseas practice or carry out your/their role in the business in a way that encourages equality of opportunity and respect for diversity.

Guidance note

(i)

Every jurisdiction has its own legal, regulatory and cultural framework for equality and diversity. The SRA does not expect, or require, regulated individuals or bodies practising overseas to approach these issues as they would in England and Wales. It does, however, expect that SRA regulated individuals and bodies will do what they reasonably can to encourage equality of opportunity and respect for diversity, within the legal, regulatory and cultural context in which they are practising overseas.

1.12

Overseas Principle 10: You must protect client money and assets.

Guidance note

(i)

In addition to complying with the specific requirements in the following parts of these rules, you and those for whom you are responsible should comply with local regulatory requirements in relation to client money, documents and assets and, in any event, you should ensure that they are protected appropriately.

Part 2: Application

Rule 2: Application

2.1

With regard to the Overseas Principles set out in Rule 1:

(a)

they apply to you if you are a regulated individual practising overseas, or a responsible authorised body in relation to each of its overseas practices;

(b)

you will be committing a breach if you permit another person to do anything on your behalf which, if done by you, would constitute a breach of these rules;

(c)

you should ensure that you and those for whom you are responsible under these rules comply with all legal and regulatory obligations applicable in the jurisdiction outside England and Wales in which you or they are practising. You, and those for whom you are responsible under these rules, should not cause, contribute to or facilitate a failure to comply with those legal or regulatory obligations by any other person or body subject to them;

(d)

where there is a conflict between compliance with the Overseas Principles set out in Rule 1 and/or the Overseas Accounts Rules or the Reporting Requirements set out in the following rules on the one hand, and any requirements placed upon you or those for whom you are responsible under these rules by local law or regulation on the other hand, the latter shall prevail, with the exception of Overseas Principle 6, which must be observed at all times;

(e)

Reserved legal activities may only be conducted overseas from an authorised body. However, regulated individuals may conduct reserved legal activities overseas in the following circumstances:

(i)

on an occasional basis from an Overseas Practice for clients in England and Wales provided that they comply with the SRA Principles and the provisions in Chapter 13A.3 to 13A.6 of the SRA Code of Conduct when conducting those reserved legal activities.

(ii)

from an Overseas Practice under the Overseas Principles provided that this work is undertaken for clients based outside England and Wales.

(f)

Notwithstanding (e) above, if you are a solicitor or a REL, and your practice predominantly and consistently comprises the provision of legal services to clients, or in relation to assets located in England and Wales, then regardless of where you are established, the SRA Principles and Chapter 13A of the SRA Code of Conduct will apply;

(g)

if you are a regulated individual practising overseas, or a responsible authorised body, you must ensure that you, or those for whom you are responsible under these rules, comply with any requirements under:

(i)

the SRA Property Selling Rules 2011;

(ii)

the SRA Insolvency Practice Rules;

(iii)

the SRA European Cross-border Practice Rules;

(iv)

the SRA Financial Services (Scope) Rules;

(v)

the SRA Financial Services (Conduct of Business) Rules 2001; and

(vi)

the SRA Quality Assurance Scheme for Advocates (Crime) Regulations 2013;

which apply to you or your overseas practice.

Part 3: Overseas Accounts Rules

Rule 2A: Purpose of the overseas accounts provisions

2A.1

The purpose of Part 3 of these rules is to describe how Overseas Principle 10 applies to client money (overseas) in order to ensure that it is protected and used for appropriate and proper purposes only.

Rule 2B: Application and waivers

2B.1

You:

(a)

as a regulated individual practising overseas must ensure that you; or

(b)

as a responsible authorised body, must ensure that your overseas practice, and those for whom you are responsible,

comply both with Parts 3 and 4 of these rules, and any applicable legal or regulatory requirements of the jurisdiction in which you or your overseas practice are practising relating to handling of client money or assets. If compliance with any provision of these rules would result in you or your overseas practice breaching local law or regulation, you may disregard that provision to the extent necessary to comply with the local requirements subject to the overriding obligations of Overseas Principle 6.

2B.2

In any particular case or cases the SRA may waive in writing any of the provisions of Parts 3 or 4 of these Rules, may place conditions on, and may revoke any waiver.

Rule 2C: Dealings with client money

2C.1

In all dealings with client money (overseas), you as a responsible authorised body must ensure that your overseas practice:

(a)

keeps client money (overseas), separate from money which is not client money (overseas);

(b)

on receipt, pays client money (overseas) into a client account (overseas) without undue delay and keeps it there, unless the client has agreed otherwise or it is paid directly to a third party in the execution of a trust under which it is held;

(c)

ensures by use of proper accounting systems and processes that client money (overseas) is used for the relevant client's matters only and for the purposes for which they have been paid;

(d)

uses money held as trustee of a trust for the purposes of that trust only;

(e)

establishes and maintains proper accounting systems and proper internal controls over those systems to ensure compliance with these rules;

(f)

returns client money (overseas) to the person on whose behalf the money is held promptly, as soon as there is no longer any proper reason to retain those funds;

(g)

keeps accounting records to show accurately the position with regard to the money held for each client and trust for a minimum period of six years; and

(h)

accounts for interest on client money (overseas) in accordance with local law and customs of the jurisdiction in which you or your overseas practice are practising and otherwise when it is fair and reasonable to do so in all circumstances.

Part 4: Reporting requirements

Rule 3: Reporting requirements

3.1

The SRA does not expect or require the same level of detailed monitoring, reporting and notification from those practising overseas as it would expect of authorised persons and authorised bodies in England and Wales. The level of reporting the SRA expects is proportionate to the level of regulatory risk posed by an overseas practice.

3.2

You, as a regulated individual practising overseas or as a responsible authorised body, must monitor any material or systemic breaches of the Overseas Principles that apply to you or to those for whom you are responsible and report them to the SRA when they occur, or as soon as reasonably practicable thereafter. In relation to an overseas practice, a material or systemic breach will relate either to the character and suitability of an individual, the financial vulnerability of an overseas practice outside of established business planning, or a pattern of behaviour within an overseas practice that infringes Overseas Principle 6. Notifications by the compliance officer of a responsible authorised body, or by another person on behalf of an overseas practice will satisfy these requirements without separate notifications from each individual or body who has knowledge of the breach. For example, you will be required to:

(a)

notify the SRA, if you, or any of the partners, members, managers, solicitor employees or other professionally qualified employees in your overseas practice, are convicted by any court of a criminal offence or become subject to disciplinary action by another regulator;

(b)

notify the SRA immediately if you believe that your firm or your overseas practice is in serious financial difficulty;

(c)

provide the SRA with documents held by you or your overseas practice, to which it is entitled, and any necessary permissions to access information as soon as possible following a notice from the SRA to do so.

(d)

provide the SRA, if you are a responsible authorised body, with an annual return which:

(i)

identifies the contact details of the office(s) from which you are, or your overseas practice is, practising, and

(ii)

confirms that you have fulfilled your reporting and notification obligations.

3.3

The SRA may require the delivery of an accountant's report by you as a responsible authorised body in respect of your overseas practice.

3.4

This report must:

(a)

be signed by a qualified accountant approved by the SRA;

(b)

contain the information specifically requested by the SRA in relation to the protection and movement of client money (overseas);

(c)

contain a description of the reporting accountant's examination of your records and relevant documentation;

(d)

contain a statement from the reporting accountant which confirms that, save for trivial breaches:

(i)

you have complied with rule 2C; or

(ii)

where you have breached the requirements of rule 2C this is because you have been bound by local law or regulation to do so, giving details of all such breaches.

3.5

You as a regulated individual practising overseas or a responsible authorised body must promptly comply with a written notice from the SRA that you must produce for inspection by the appointee of the SRA all documents held by you or held under your control and all information and explanations requested.