COLP & COFA Compliance Checker

How the COLP/COFA framework works, with worked examples

The requirement to have compliance officers sits in rule 8.1 of the SRA Authorisation of Firms Rules: an authorised body must at all times have an individual approved by the SRA as its COLP and another (or the same individual) as its COFA. The duties of each officer are set out in paragraphs 9.1 and 9.2 of the SRA Code of Conduct for Firms. Broadly, the COLP owns compliance with the firm's authorisation terms and all regulatory arrangements except the Accounts Rules, which belong to the COFA. Both must take all reasonable steps to ensure compliance and to report serious breaches promptly.

The reportable versus recordable distinction is the part firms most often get wrong. A serious breach must be reported to the SRA promptly (Code of Conduct for Firms, paragraph 3.9, reinforced by the officers' own duties in paragraphs 9.1 and 9.2). A breach that is not serious in isolation should still be recorded in the firm's breach register, because the SRA expects officers to monitor for patterns: five small reconciliation errors in a quarter can amount to a serious systemic breach even though no single error would. Seriousness is assessed on factors such as harm caused, intent or recklessness, whether it forms part of a pattern, and how quickly it was remedied.

Worked example 1: a 4-partner conveyancing LLP holding client money, with no officers appointed. The matrix shows two outstanding appointments. The COLP must be a lawyer who is a manager or employee; the COFA need not be a lawyer, so many firms appoint their practice manager or finance director. Because the firm holds client money it must obtain an accountant's report within 6 months of its accounting period end (SRA Accounts Rules, rule 12.1), and with typical residential completion funds of £250,000 to £400,000 passing through the client account, its maximum balance will far exceed the £250,000 ceiling in rule 12.2, so the de minimis exemption is unavailable.

Worked example 2: a sole practitioner doing litigation only, who never handles client money (damages are paid direct to clients and fees are billed in arrears). She is deemed to satisfy the approval requirement as COLP and COFA of her own recognised sole practice, so no separate approval application is normally needed. With no client money held there is no accountant's report to obtain under rule 12.1, but she should keep evidence of that position, and the COLP-side duties (supervision, conflicts, reporting serious conduct breaches) apply exactly as they would in a 50-partner firm.

For firms that do hold client money but at low levels, rule 12.2 of the Accounts Rules removes the accountant's report obligation where the average client account balance over the reporting period was £10,000 or less and the maximum balance was £250,000 or less. A legal aid firm receiving only Legal Aid Agency money is also outside the client money regime for most practical purposes. If you are near these thresholds, measure them properly from your reconciliations rather than estimating.