The society criticised the regulator for taking a “piecemeal approach” to reducing regulation and giving “insufficient consideration” to the impact of the changes.
“There is a possibility that some of the changes may create perverse incentives for firms to exhibit behaviours which compromise professional principles.”
On third-party accounts, which the society said should have been the subject of a standalone consultation, Chancery Lane said: “There is no reason to believe that there will be any cost saving from firms being able to access third-party managed accounts, probably quite the reverse.
“There is also no reason to believe that it will represent any better protection against fraud. The present arrangements present no risk to the public as these are covered by insurance/the SRA compensation scheme.
“If the SRA has evidence or analysis to support a belief that such arrangements could reduce fraud compared to traditional client accounts, the Law Society would be interested to see it.”
The society said it would like to see more information and analysis on the impact of third-party accounts on the Compensation Fund, particularly what would happen in the event of a third-party managed account provider “collapsing and losing client money”.
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