SRA Handbook

Separate businesses

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Version 12 of the Handbook was published on 31/10/2014. For more information, please click 'History' Above

Chapter 12: Separate businesses

The purpose of this chapter is to ensure clients are protected when they obtain mainstream legal services from a firm regulated by the SRA. This is accomplished by restricting the services that can be provided through a separate business that is not authorised by the SRA or another approved regulator.

This chapter addresses two kinds of services:

1. those which you cannot offer through a separate business ("prohibited separate business activities"). These are "mainstream" legal services which members of the public would expect you to offer as a lawyer regulated by the SRA or another approved regulator; and
2. those which you can offer either through a separate business ("a permitted separate business"), or through an authorised body. These are the kind of services a member of the public would not necessarily expect to be provided only by a lawyer regulated by the SRA or another approved regulator, but which are "solicitor-like" services.

Clients of a permitted separate business will not have the same statutory protections as clients of an authorised body and it is important that this is clear to clients of the separate business, particularly where they are being referred from one business to the other.

The outcomes in this chapter show how the Principles apply in the context of separate businesses.

Outcomes

You must achieve these outcomes:

O(12.1)

you do not:

(a)

own ; or

(b)

actively participate in ,

a separate business which conducts prohibited separate business activities;

O(12.2)

if you are a firm you are not:

(a)

owned by ; or

(b)

connected with ,

a separate business which conducts prohibited separate business activities;

O(12.3)

where you:

(a)

actively participate in ;

(b)

own ; or

(c)

are a firm and owned by or connected with,

a permitted separate business, you have safeguards in place to ensure that clients are not misled about the extent to which the services that you and the separate business offer are regulated;

O(12.4)

you do not represent any permitted separate business as being regulated by the SRA or any of its activities as being provided by an individual who is regulated by the SRA;

O(12.5)

you are only connected with reputable separate businesses;

O(12.6)

you are only connected with a permitted separate business which is an appointed representative if it is an appointed representative of an independent financial adviser.

Indicative behaviours

Acting in the following way(s) may tend to show that you have achieved these outcomes and therefore complied with the Principles:

IB(12.1)

ensuring that client information and records are not disclosed to the permitted separate business, without the express consent of the client;

IB(12.2)

complying with the SRA Accounts Rules and not allowing the client account to be used to hold money for the permitted separate business;

IB(12.3)

where you are referring a client to a permitted separate business, informing the client of your interest in the separate business;

IB(12.4)

terminating any connection with a permitted separate business where you have reason to doubt the integrity or competence of that separate business.

In-house practice

Outcomes 12.1 and 12.3 to 12.6 in this chapter apply to your in-house practice.

Notes

(i)

It is important that clients are not misled or confused about the regulatory status of a permitted separate business, the services it provides and the people working within it. Particular care needs to be taken regarding:

(a)

the name or branding of the separate business;

(b)

misleading publicity; and

(c)

the proximity of the permitted separate business to your firm, particularly if you share premises.

(ii)

This chapter should be read in conjunction with:

(a)

Chapter 3 (Conflicts of interests)

(b)

Chapter 6 (Your client and introductions to third parties); and

(c)

Chapter 8 (Publicity).