Profoundly important decisions are about to be taken that will determine the types of law firm that will be allowed to operate from October 2011 and how the profession will be regulated.

On 15 March the SRA board will conclude its consideration of the responses to our last consultation on the new SRA Handbook and to the various points which were made when SRA chief executive Antony Townsend and I met the Law Society Council in February. We will then make our final decisions about the new regulatory arrangements that the Legal Services Board (LSB) intends to come into effect in October.

On 23 March the council will decide whether to approve the SRA’s proposed application to the LSB to become a licensing authority for alternative business structures.

It should be understood that ABSs will be established in the legal services market regardless of whether the Law Society approves the SRA’s application to license them. The LSB is entitled to regulate ABSs directly and has already indicated that it will do so if necessary to fulfil parliament’s intention. The Council for Licensed Conveyancers has already applied to regulate ABSs; others may follow.

At our February meeting with the Law Society Council, members made plain to us that undesirable people with suspect credentials must not be allowed to be involved with ABSs. We agree – and that is central to our proposals. We recognise that this is important not only to safeguard the reputation of the profession and the interests of consumers, but also to ensure that the Compensation Fund is properly protected.

The authorisation regulations have been very tightly drawn. A new authorisations function will check the authenticity and veracity of applicants, both entities and the individuals within them. Many of its staff will be experts in this field, including former police officers who specialise in fraud and other economic crime.

This will be a robust two-stage process. Applicants will be subject to the same suitability criteria that are applied to solicitors, so Criminal Records Bureau checks will be a routine part of the process.

Our staff will work with law enforcement agencies, other regulators and agencies in the UK and overseas, exchanging intelligence using a range of memoranda of understanding. They will use various systems to authenticate the data provided and make enquiries to establish the beneficial owner of any firm-based application, including those from overseas. They may request personal interviews and ask to examine a range of original documents to establish an individual’s bona fides. Any applications that give rise to concern will be subject to further enhanced vetting.

Should the intelligence officer identify further areas of concern, the matter will become subject to a formal forensic investigation. Applications will be rejected if insufficient information is provided or there are doubts about suitability.In parallel, enquiries will be made about the structures and assurance systems of applicant firms to ensure that their business models do not pose unacceptable risks.

The board has reviewed the extensive work undertaken by the SRA since 2009. This has encompassed not just the Handbook and the proposals to license ABSs, but also the overhaul of the SRA’s senior management, organisational structures, staff capabilities, IT and other business processes. We have had advice from external consultants who have expertise in regulation and systems. This work remains on track. We will continue to supervise the programme closely to ensure that on 6 October the organisation is ready to license ABSs effectively and to regulate them in the public interest thereafter.

The SRA board consists of solicitors of considerable standing and lay people with senior board-level experience. You can see who they are on the SRA website. We are all acutely aware of our responsibility to uphold and protect the profession’s standards.

In my judgement, there are no significant differences of principle between the SRA and the Law Society on ABSs. Although there have been and remain some issues between us, I am confident that they can be resolved in the time available. We share the Law Society’s objective that the reforms due to be introduced on 6 October must be fit for purpose.

However, I must emphasise that if the SRA is not allowed to regulate ABSs and, in consequence, the LSB does so, thereby becoming a direct, as distinct from an over-arching, regulator, the consequences would be seriously damaging for both the Law Society and the SRA.

The unified regulatory structure with a common set of professional values, for which the SRA and the Law Society have argued so strongly, and which is surely in the best interests of clients, the public and the profession, would be lost. Solicitors’ firms which wished to appoint a non-lawyer partner or investor would cease to be regulated by the SRA. Groups of firms could be encouraged to break away from the SRA to have their own bespoke regulators. A more fragmented structure would confuse consumers, undermine public confidence and fail to deliver a regulatory system in which traditional law firms can compete with ABSs on equal terms.

Over and above those consequences, the delicate balance between the Law Society in its approved regulator role, the Law Society as representative body and the SRA as independent regulator would inevitably be called into question. A review of the governance arrangements – arrangements which the Law Society and the SRA have only recently settled – would be bound to follow.

I have given the Law Society my personal assurance that we would not seek its approval of our licensing application unless we are satisfied that we have robust arrangements in place to ensure that: high ethical standards of the profession are not diluted; undesirable applicants are prevented from exploiting the new freedoms; the Compensation Fund is protected; and the SRA itself is fully prepared. In making the application that it regulates ABSs, my board will repeat these assurances to the Law Society, all parts of the profession and the public.

Charles Plant is chair of the board of the Solicitors Regulation Authority