Solicitors Qualifying Examination (SQE) Ethics, Professional Conduct and Solicitors Accounts (Pervasive) Syllabus

Ethics, Professional Conduct and Solicitors Accounts (Pervasive) syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Ethics, Professional Conduct and Solicitors Accounts (Pervasive) in Solicitors Qualifying Examination (SQE), not a summary of it.

1. 1

   SRA Principles and Codes of Conduct

   3 topics

   • The SRA Principles
     • Acting with integrity and honesty
     • Upholding the rule of law and public trust
     • Acting in the best interests of clients
     • Resolving conflicts between Principles
   • Code of Conduct for Solicitors (individuals)
     • Maintaining trust and acting fairly
     • Service and competence
     • Cooperation with regulators
   • Code of Conduct for Firms
     • Compliance, systems and supervision
     • Roles of COLP and COFA
2. 2

   Conflicts, Confidentiality and Client Care

   4 topics

   • Conflicts of interest
     • Own interest conflicts
     • Conflicts between clients and exceptions
   • Confidentiality and disclosure
     • The duty of confidentiality
     • The duty of disclosure and the conflict between them
     • Information barriers
   • Client care and complaints
     • Costs information and client engagement
     • Complaints handling and the Legal Ombudsman
   • Anti-money laundering and financial crime
     • Money Laundering Regulations and due diligence
     • Reporting obligations and tipping off
3. 3

   Regulation, Funding and Practice Structures

   3 topics

   • The regulatory framework
     • The SRA and the Legal Services Act 2007
     • Reserved legal activities
     • Practising certificates and authorisation
   • Financial services and referrals
     • Financial Services and Markets Act 2000 exemptions
     • Referral arrangements and fee sharing
   • Equality, diversity and undertakings
     • Equality Act 2010 duties in practice
     • Solicitors' undertakings and enforcement
4. 4

   Solicitors Accounts

   3 topics

   • SRA Accounts Rules framework
     • Client money and the client account
     • Keeping client and business money separate
     • Withdrawals from the client account
   • Recording and reconciling transactions
     • Client and business ledgers
     • Double-entry bookkeeping entries
     • Periodic reconciliations
   • Specific accounting scenarios
     • Interest on client money
     • Mixed receipts and transfers
     • Accountant's reports and breaches

Ethics, Professional Conduct and Solicitors Accounts (Pervasive) flashcards for Solicitors Qualifying Examination (SQE)

23 of 50 cards from the Ethics, Professional Conduct and Solicitors Accounts (Pervasive) deck — real questions with worked answers.

1. What are the seven SRA Principles that all regulated individuals and firms must uphold?

   You must act: (1) in a way that upholds the constitutional principle of the rule of law and the proper administration of justice; (2) in a way that upholds public trust and confidence in the solicitors' profession; (3) with independence; (4) with honesty; (5) with integrity; (6) in a way that encourages equality, diversity and inclusion; and (7) in the best interests of each client.

2. When two or more SRA Principles come into conflict, which takes priority?

   The Principle that best serves the public interest prevails, and especially the public interest in the proper administration of justice. So the public interest outweighs the interests of an individual client (e.g. Principle 1 can override Principle 7).

3. In SRA terminology, what is the difference between 'honesty' and 'integrity'?

   Honesty is judged objectively by the ordinary standards of reasonable and honest people (the Ivey test) and concerns truthfulness. Integrity is a broader concept of adherence to the ethical standards of the profession; one can lack integrity (e.g. taking unfair advantage, recklessness) without being dishonest. Integrity sets a higher bar than mere honesty.

4. What is the Ivey v Genting Casinos test for dishonesty?

   Two stages: (1) ascertain subjectively the actual state of the individual's knowledge or belief as to the facts; then (2) ask whether, given that state of mind, the conduct was dishonest by the objective standards of ordinary decent people. There is no separate requirement that the defendant appreciated their conduct was dishonest.

5. Name the two SRA Codes of Conduct and who each applies to.

   (1) The Code of Conduct for Solicitors, RELs and RFLs — applies to individuals authorised by the SRA. (2) The Code of Conduct for Firms — applies to SRA-authorised bodies (and has effect for managers and compliance officers). Individuals in a firm remain personally bound by the individual Code even when the firm is also responsible.

6. What two compliance officer roles must every SRA-authorised firm have, and what does each oversee?

   A COLP (Compliance Officer for Legal Practice) — responsible for compliance with the firm's authorisation terms and SRA regulatory requirements (excluding accounts). A COFA (Compliance Officer for Finance and Administration) — responsible for compliance with the SRA Accounts Rules. Both must report serious breaches (and may report non-material breaches) to the SRA.

7. What is the SRA's reporting obligation when you become aware of a serious breach of the regulatory arrangements?

   You must report promptly to the SRA, or otherwise ensure it is reported, any facts or matters that you reasonably believe are capable of amounting to a serious breach of the SRA's regulatory arrangements by you or others. You must also not subject anyone to detriment for making such a report (no obstructing whistleblowing).

8. Define a 'conflict of interest' and an 'own interest conflict' under the SRA Codes.

   A conflict of interest is a situation where your separate duties to act in the best interests of two or more clients in the same or a related matter conflict (a 'client conflict'). An own interest conflict is where your duty to act in the best interests of a client conflicts with your own interests in relation to that or a related matter.

9. What is the general rule on acting where there is an own interest conflict?

   You must not act if there is an own interest conflict or a significant risk of one. There are no exceptions — unlike a client conflict, an own interest conflict can never be cured by consent.

10. What are the two exceptions allowing a solicitor to act despite a client conflict (or significant risk of one)?

    You may act if either: (1) the clients have a substantially common interest in relation to the matter or its objective; or (2) the clients are competing for the same objective. In both cases all clients must give informed written consent, you must have effective safeguards to protect confidential information, and you must be satisfied it is reasonable to act for all of them.

11. Define 'competing for the same objective' as an exception to the conflict rule.

    A situation where two or more clients are competing for an 'objective' which, if attained by one, makes it unattainable to the others. The classic example is two clients bidding to acquire the same asset or company (e.g. a contract race / tender). It is a defined term in the SRA Glossary.

12. What is the duty of confidentiality and how long does it last?

    You must keep the affairs of current and former clients confidential unless disclosure is required or permitted by law or the client (or former client) consents. The duty is unqualified, owed to current AND former clients, and continues indefinitely — even after the retainer ends and after the client's death.

13. What is the duty of disclosure and how does it differ from confidentiality?

    Where you are acting for a client on a matter, you must make the client aware of all information material to the matter of which you have knowledge. Disclosure runs in favour of the client; confidentiality protects others' information. The duty of confidentiality to one client always takes precedence over the duty of disclosure to another.

14. In a confidentiality vs disclosure conflict, when may a firm act for client B when it holds confidential information from client/former client A material to B's matter?

    Only where the confidential information can be protected by effective safeguards (e.g. an information barrier) AND either: current/former client A gives informed consent in writing to your acting and to measures protecting the information; or you put effective safeguards in place and it is reasonable to act. You must never disclose A's confidential information to B without A's consent.

15. What must client care information cover at the outset and during a retainer?

    You must ensure clients receive the best possible information about how their matter will be priced and, both at the outset and as the matter progresses, about the likely overall cost. You must give clients information in a way they can understand, ensure they can make informed decisions, and explain their right to complain and how.

16. What information about complaints must you give a client, and what is the time limit for going to the Legal Ombudsman?

    You must inform clients in writing at the outset (and when relevant later) about their right to complain, how to complain, what to do if dissatisfied, and their right to complain to the Legal Ombudsman, its contact details and time limits. A complaint to the LeO must normally be made within one year of the act/omission, or within one year of when the client should reasonably have known of cause for complaint.

17. What time limits apply to a client bringing a complaint to the Legal Ombudsman after the firm's own process?

    The client must refer the complaint to the LeO within: 6 months of receiving the firm's final written response to the complaint; AND no more than 1 year from the act/omission complained of, or 1 year from when the client should reasonably have known there was cause for complaint.

18. What are the four key requirements (the 'CDD' obligations) under the Money Laundering Regulations 2017?

    (1) Identify the client and verify identity from reliable, independent sources; (2) identify and verify any beneficial owner (e.g. anyone owning/controlling more than 25% of a company); (3) obtain information on the purpose and intended nature of the business relationship; and (4) conduct ongoing monitoring of the relationship. Together these constitute Customer Due Diligence (CDD).

19. When must Enhanced Due Diligence (EDD) be applied under the MLR 2017?

    EDD is required for higher-risk situations, including: where the client or counterparty is established in a high-risk third country; any transaction with a Politically Exposed Person (PEP), their family member or known close associate; complex or unusually large transactions with no apparent economic/legal purpose; and any case the firm assesses as presenting a higher risk of money laundering or terrorist financing.

20. What is the difference between a Suspicious Activity Report (SAR) and the offences of 'tipping off' under the Proceeds of Crime Act 2002?

    A SAR is a disclosure made to the NCA (via the firm's MLRO/nominated officer) where you know or suspect, or have reasonable grounds to suspect, money laundering. Tipping off (s.333A POCA) is the offence of disclosing to the suspect, or anyone, information likely to prejudice an investigation after a disclosure has been or is being made. Tipping off is itself a criminal offence.

21. List the three principal money laundering offences under sections 327–329 POCA 2002.

    s.327 — concealing, disguising, converting, transferring or removing criminal property from the jurisdiction; s.328 — entering into or becoming concerned in an arrangement which facilitates the acquisition, retention, use or control of criminal property by/for another; s.329 — acquiring, using or possessing criminal property. The maximum penalty for each is 14 years' imprisonment and/or a fine.

22. What is 'criminal property' under POCA 2002 and what state of mind is required?

    Property is criminal property if it constitutes, or represents, a person's benefit from criminal conduct (in whole or part, directly or indirectly) AND the alleged offender knows or suspects it constitutes or represents such a benefit. There is no de minimis threshold and the underlying crime can be any criminal conduct.

23. What bodies make up the regulatory framework for solicitors in England and Wales, and what does each do?

    The Law Society is the representative/professional body; the SRA is its independent regulatory arm (front-line regulator setting and enforcing standards); the Legal Services Board is the oversight regulator supervising approved regulators; and the Legal Ombudsman handles individual consumer complaints about service. The SDT (Solicitors Disciplinary Tribunal) adjudicates serious disciplinary cases.

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