Breaches of SRA Accounts Rules

Introduction

Even the most carefully run firm will, from time to time, **breach the SRA Accounts Rules** (in force from 25 November 2019). What matters for SQE1 — and in practice — is **what you do next**. This chapter examines the **duty to correct breaches** under **Rule 6**, the **internal duty to report** a breach to the firm's **Compliance Officer for Finance and Administration (COFA)**, the importance of **record-keeping** (the breach register), and the **enforcement consequences** that may follow — from a simple letter of advice, through SRA **financial penalties** and **written rebukes**, up to referral to the **Solicitors Disciplinary Tribunal (SDT)** and, ultimately, being **struck off the roll**.

Assessment focus

For SQE1 FLK2 (Solicitors Accounts), you must be able to **identify whether a breach has occurred**, state the **immediate remedial steps** required by **Rule 6**, and explain **who is responsible** for putting things right. The single most heavily examined point is **Rule 6.1**: where money has been improperly withheld or withdrawn from a client account, the firm must **promptly** correct the breach on discovery — typically by **transferring the firm's own money into the client account** to make good the shortfall. Candidates must also know the **internal reporting line to the COFA** and be able to **rank the enforcement outcomes** (no action / financial penalty / rebuke / control of practice / referral to the SDT / disqualification). Questions are single best answer (SBAQs) set in **realistic firm scenarios**; you must apply the rules, not merely recite them. This is a closed-book assessment.

Study tips

1) Memorise **Rule 6.1**: correct any breach **promptly on discovery**, and **immediately** replace any client money improperly withheld or withdrawn — the firm's own money goes in to make good the shortfall. 2) Remember **who is responsible**: the **person who caused the breach** AND **all the managers (principals/partners)** of the firm — responsibility is **collective**, not limited to the individual at fault. 3) Distinguish the **two reporting duties**: (i) the **internal** duty to tell the **COFA**; and (ii) the firm's/individual's **external** duty to report **serious** breaches to the **SRA** under the Codes of Conduct (a COFA must report material breaches; non-material breaches are recorded and reported on request). 4) Keep a **breach register** recording the breach, the corrective action and the preventive measures taken. 5) Learn the **enforcement ladder** and that only the **SDT** (not the COFA or the firm) can **strike a solicitor off**, **suspend** them or impose an **unlimited fine** under **s.47 Solicitors Act 1974**.