The Solicitors Regulation Authority will ask solicitors to pay 7% more in practising fees to help fund a £10m hike in the regulator’s annual budget.

The regulator said today its costs for 2023/24 are likely to be around £97.8m, up from £87.3m in the current year. The increase is subject to a six-week consultation.

The SRA's portion of the individual practising certificate fee for next year is set to rise from £151 to £162, as the regulator’s contribution from the profession increases from £60.5m to £67.5m. Firms, who contribute around 60% of this total, will continue to pay a proportion of their turnover. Representative body the Law Society has yet to finalise its own proposed call on the PC fee for 2023/24.

As well as increasing PC fees, the SRA’s budget will also be topped up by an expected increase in income from the Solicitors Qualification Examination, from £12.7m to almost £14m.

The SRA says that inflation accounts for some of the budget increase – staff salaries recently rose by 5.5% - but that its increased workload has also added to costs. Headcount is expected to increase to 770 in the next year as 30 extra full-time staff are brought in to bolster the investigation and enforcement team and to work on increased anti-money laundering activity.

Further investment will also be required for a new ‘data-driven approach to proactive regulation’ and efforts to support small firms to use technology effectively.

SRA chief executive Paul Philip said keeping the profession’s contributions as low as possible has been a priority, and the regulator points out that overall the individual PC fee was only £4 higher this year than it was in 2018/19. Philip said: ‘We have absorbed inflation and driven efficiencies across the business while making improvements to our operations and taking on significant new responsibilities, for example in relation to anti-money laundering.

‘However, we like everyone else, continue to face significant upward cost pressures which, even with our ongoing commitment to efficiency and cost-control, we can no longer absorb.’

The SRA set out the budget proposals as part of its 2023/24 business plan, which is published today alongside a three-year corporate strategy.

The next 12 months will see the regulator take on the management and operation of a solicitors indemnity fund to cover claims brought against firms closed more than six years ago. The SRA is also implementing changes to its financial penalties regime and approach to publishing regulatory decisions.

In 2023/24 the SRA will carry out its first independent evaluation of the SQE, consult on potential additions to transparency requirements, and deliver any changes required by the Economic Crime and Corporate Transparency Bill.

It also plans to publish research findings on why ethnic minority candidates do worse in professional assessments, and why ethnic minority solicitors are overrepresented in reports to the SRA and subsequent prosecutions.

It is estimated that staff expenditure will increase 14% to £46m, SQE costs by 10% to £13.8m, and intervention costs by 7% to £7.1m.

The SRA is currently operating at about £1m below the minimum level of reserves that it has set as a target and has committed to closing that gap over the next three years.

The budget will increase over the next three years by no more than inflation plus 2%.

The extra compensation fund contribution for individuals will be unchanged at £30 in 2023/24. The required contribution from firms is £660 – a reduction from £690 in 2022/23.

 

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