In May 2025, the Solicitors Regulation Authority (SRA) announced significant reforms to its fining regime, marking a new chapter in how financial penalties are applied across the legal profession. These changes follow the enactment of the Economic Crime and Corporate Transparency Act 2023 (ECCTA), which came into force in March 2024 and granted the SRA unlimited fining powers for certain breaches involving economic crime [1].
For small law firms and sole practitioners, understanding and adapting to these reforms is essential. The SRA’s updated enforcement strategy and fining guidance directly impact how misconduct is assessed, penalised, and publicised. This blog post breaks down the key changes and offers practical action points to help small practices stay compliant and mitigate risk.
What Has Changed in the SRA’s Fining Regime?
1. Unlimited Fines for Economic Crime
Under ECCTA, the SRA now has the power to impose unlimited financial penalties for breaches related to economic crime, including:
- Money laundering
- Fraud and theft
- Bribery and corruption
- Tax evasion
- Breaches of financial sanctions [2]
This applies to misconduct occurring after 4 March 2024 and includes failures to prevent or detect such offences.
2. No Use of Global Turnover for Fine Calculation
Following feedback from the profession, the SRA confirmed it will not use global turnover to calculate fines for firms. This decision is particularly relevant for small law firms, which feared disproportionate penalties compared to larger practices [1].
Action point: Ensure your firm’s financial records are accurate and up-to-date, as fines will still be assessed based on firm size, impact of misconduct, and financial benefit gained.
3. Revised Approach to Drink Driving Offences
The SRA has changed its stance on drink driving offences, stating that financial penalties will no longer be imposed for such breaches except in exceptional circumstances [1].
4. Enhanced Enforcement Strategy
The SRA’s Enforcement Strategy has been updated to reflect a more proportionate and robust approach. Financial penalties are now positioned as a key tool to:
- Maintain public confidence
- Deter misconduct
- Remove financial gain from wrongdoing [2]
The SRA clarified that fines are not intended to punish, but to protect clients and uphold standards.
What This Means for Small Firms and Sole Practitioners
Increased Risk for AML Failures
With the SRA’s expanded powers under ECCTA, firms that fail to meet anti-money laundering (AML) obligations face unlimited fines. This includes failures in client due diligence, source of funds checks, and internal controls.
Action point: Review your AML policies and ensure they align with the latest SRA AML guidance. Conduct a fresh Practice-Wide Risk Assessment (PWRA) and document all updates.
Greater Scrutiny of Internal Controls
The SRA will assess whether firms had adequate systems in place to prevent misconduct. Small firms must demonstrate that they have:
- Clear compliance procedures
- Effective supervision
- Documented training records
Transparency and Public Accountability
All fines imposed by the SRA are published and paid to the Treasury, not retained by the regulator. This increases the reputational risk for firms found in breach.
Action point: Ensure your firm has a crisis communication plan in place. If a breach occurs, transparency and swift remediation are key to protecting your reputation.
How Are Fines Determined?
The SRA uses a published fining guidance to help adjudicators determine the appropriate penalty. Factors considered include:
- Seriousness of misconduct
- Impact on clients or the public
- Financial benefit gained
- Previous disciplinary history
- Mitigating or aggravating circumstances [2]
Fines can only be imposed by legally qualified adjudicators or panels, and all decisions are subject to appeal to the Solicitors Disciplinary Tribunal (SDT).
Practical Action Points for Compliance
1. Update Your Risk Assessments
Ensure your PWRA and matter-level risk assessments reflect the increased regulatory risk posed by economic crime. Include references to ECCTA and the SRA’s unlimited fining powers.
2. Review Your AML Framework
Conduct a full audit of your AML procedures, including:
- Client onboarding
- Source of funds checks
- Ongoing monitoring
- Suspicious activity reporting
Use the latest SRA AML guidance and LSAG updates as benchmarks.
3. Train Your Team
Provide training on:
- Economic crime risks
- SRA enforcement strategy
- Regulatory reporting obligations
Document all training sessions and ensure staff understand the consequences of non-compliance.
4. Strengthen Documentation
The SRA expects firms to evidence their compliance. Keep detailed records of:
- Risk assessments
- Decision-making processes
- Client communications
- Internal audits
This is especially important for sole practitioners who may not have a compliance team.
5. Monitor Regulatory Updates
The SRA plans to publish a further consultation on its fining framework later in 2025 [1]. Stay informed by subscribing to SRA updates and reviewing guidance regularly.
Final Thoughts
The SRA fining regime reforms of May 2025 represent a significant shift in how regulatory breaches are penalised. For small law firms and sole practitioners, the key takeaway is clear: compliance must be proactive, documented, and embedded into daily practice.
With unlimited fines now possible for economic crime-related breaches, firms must ensure their AML systems, internal controls, and staff training are robust and up to date. By taking the right steps now, small practices can protect themselves from financial penalties and reputational harm.
References
[1] SRA | Further changes to the fining regime | Solicitors Regulation …
[2] Financial Penalties- further developing our framework consultation