SRA repeat advice to firms in difficulty
03rd April 2013

The SRA have repeated their advice urging firms facing financial difficulties to seek outside help and advice at the earliest opportunity.

The call comes after the intervention by the SRA into eight firms so far this year.

Based on trends from previous years, the SRA had estimated the total number of interventions for 2013 would be around 30, with an associated estimated budget of around £1.3 million.

Due to the demands so far this year the cost of dealing with increasing financial instability by firms is putting a strain on the SRA‘s budget.

Ms Barrass stressed the importance of firms seeking help as soon as possible. She said that firms should already be talking to the SRA via Supervision and, if not, should contact them immediately.

A financial stability presentation was made to the SRA Board earlier this month to highlight the emerging issues.

It reported that eight firms were in intensive supervision where intervention was highly probable, and that intervention was possible for a further 48.

It also outlined a range of behaviours which were typical of a firm in trouble.

These include payments made to partners irrespective of “cash at the bank”, all net profits drawn and no “reserve capital pot” retained, drawings exceeding net profits, high borrowing/net asset ratios, firms controlled by an “inner circle” of senior management and key financial information not shared with “rank and file” partners/members.

 

 

 

 

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