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SRA issues new guidance on alternative business structure applications

The Solicitors Regulation Authority has issued guidance clarifying when the statutory six-month time limit for consideration of an alternative business structure licensing application begins, after recent criticism about the speed of the process.

The watchdog said the six months would only start once applicants have reached the third stage of the process and it had all the information required to begin a formal consideration of the application and make a decision.

The clarification comes in new guidance designed to assist those planning on submitting an application for an ABS licence. It covers the three-stage process in detail and also provides information on key elements such as the Suitability Test.

Stage 1 involves an online application. Stage 2 involves the SRA working with applicants on the preparation of their application ahead of formal submission at Stage 3.

“The advantage of this stage [stage 2] is the flexibility it affords to applicants to work with the SRA to highlight and consider amendments to their application which make it more likely to result in a positive licensing decision,” the watchdog said.

The SRA has so far issued eight ABS licences since it started accepting applications in January, including those given to high-profile organisations such as Co-operative Legal Services and Russell Jones & Walker. It reported that a further 30 had reached the formal decision phase, with 130 at Stage 2 of the process.

Samantha Barrass, SRA Executive Director, said: "This guidance is aimed at increasing the transparency of the licensing process. There have been some misunderstandings about the complexity of the process and the timescales involved. This makes it clear what applicants should expect and how we can support them in submitting a good application.

"It is essential that the public has confidence in ABSs, so we make no apologies for the robustness of the process. However, we are confident our approach is proportionate and applicants who engage with us and supply the necessary information are better positioned to move smoothly through the process.”

The SRA has also urged those “who feel their applications may be more complex, who are currently outside the SRA's regulatory remit or new to legal services” to contact its ABS Authorisation Team to discuss their application before submission. 

Barrass also warned applicants who are dependent on financing to contact the SRA beforehand, to discuss timescales, before putting finance arrangements in place.

The guidance can be found on the SRA website here.