SRA seeks charitable status in Law Society split

---

SRA: Greater accountability and tax benefits

The Solicitors Regulation Authority (SRA) is applying for charitable status as part of becoming a distinct legal entity within the Law Society Group, it has emerged.

The regulator said the move would enhance its accountability, with the Charity Commission overseeing the public interest nature of its role.

Compliance with Charity Statement of Recommended Practice requirements in relation to its accounts would also increase accountability to the public and profession for the way it used its funds, the SRA said, while it would be able to benefit from tax relief as well.

The Law Society announced in April that the SRA would be hived off into a corporate entity – to help comply with the Legal Services Board’s tightened internal governance rules – although the arrangement does not change the fundamentals of the relationship between the two as set out in the Legal Services Act 2007.

The SRA initially planned to establish a charitable subsidiary of that company to deliver the Solicitors Qualifying Exam (SQE), so that it could offer VAT-exempt fees.

This work opened up the prospect of the whole SRA becoming a charity – as are other bodies with similar functions, such as the General Medical Council, Nursing & Midwifery Council, General Osteopathic Council, General Teaching Council of Scotland and the Chartered Institute of Taxation.

A paper to a special meeting of the SRA board last month said: “We have been given clear advice therefore that an application to the Charity Commission for registration of our wider regulatory functions is likely to be strong.

“Our charitable purposes can broadly therefore be described as: promoting the administration of the law and education and training in the law, through regulating solicitors and law firms to practise in England and Wales, and with the primary aim of protecting consumers of legal services and supporting the operation of the rule of law and the proper administration of justice.”

The paper said there was unlikely to be overlap between the Charity Commission’s supervision and that of the Legal Services Board: “We have been advised that the Charity Commission’s role and interest is of a different nature: it will not wish to interfere in our regulatory activities but will be concerned about any matters that impact on our charitable status.”

Further, board members could still be paid. Though the general rule is that trustees should not profit from their trusteeship, Charity Commission guidance confirms that it is acceptable for trustees to be paid a reasonable amount for providing services to the charity.

“Although the Charity Commission prefers that no more than half of the trustees are remunerated, we have been advised that the current arrangement – where director/trustees are paid – would be acceptable to the Charity Commission if we can demonstrate that the levels of remuneration are in the best interests of the charity.”

The paper said SRA board members were paid less than trustees of similar organisations, such as the General Medical Council.