Your November regulatory briefing for small law firms
Monthly Regulatory Briefing: November 2026
Welcome to the first Fraxinus Monthly Regulatory Briefing. Each month we pick out what the regulators published that matters to small law firms, say what it could mean in practice, and show where it fits in a compliance review. This edition covers late September to 26 October 2026.
The three that matter most
The SRA's AML annual report for 2025/26 (22 October). The SRA completed 966 AML compliance assessments in the year to 5 April 2026 and reports continued improvement. Fines still rose sharply to £2.6m, and of the 934 AML policies it reviewed, 313 were only partly compliant and 116 were not compliant.
The SRA's enforcement annual data (published 27 October). Reports of concerns about solicitors rose 34% to 15,914 in the year to 31 October 2025, and the SRA issued 176 fines worth £6.7m.
The SRA's statement on COLP and COFA separation (22 October). No January start and no new consultation date. The SRA is working with stakeholders and is asking some higher risk firms for assurances on governance.
AI guidance from four directions. The Law Society, CILEx Regulation, the Legal Ombudsman and the SRA have all published on AI in the last few months.
What it means, service by service
AML compliance
What changed: The SRA's new guidance says a written policy is not enough. It must be backed by controls and by step-by-step procedures that fee earners actually follow. The SRA's annual AML report (year to 5 April 2026) shows firms are improving, yet fines totalled £2.6m, up sharply on last year, and reports of suspected breaches (336) most often involved missing client or matter risk assessments and source of funds checks. The areas most often missing from the policies it reviewed were risk assessment of new technology (40%), Companies House discrepancy reporting (36%) and the firm's position on reliance (28%).
Late addition: five firms paid penalties totalling £44,800 in the SRA's latest published AML decisions, issued since August. Four followed desk-based reviews, and three involved a missing firm-wide risk assessment. The others concerned policies, controls and procedures that were not kept up to date, and missing risk assessment records. (Reported by Today's Conveyancer on 28 October.)
A question to ask: When was our AML policy last compared with the SRA's own checklist?
How we can help: We read your policy against the checklist and tell you plainly where the gaps are.
Independent file review
What changed: The SRA's annual report says source of funds checks, risk assessment processes and ongoing monitoring still need improvement. The guidance also expects firms to monitor compliance on live files.
A question to ask: If we pulled five recent files, would each show what the policy says should be there?
How we can help: An independent file review gives you an objective answer, and frees your fee earners from marking their own homework.
COLP and COFA support
What changed: On 22 October the SRA confirmed the separation rules will not start in January. It is working with stakeholders on alternatives. Meanwhile it is seeking assurances from some higher risk firms that governance is sound and that the compliance function can operate with the necessary independence. Accountants' reports to the SRA are also due to apply from April 2027, so it is worth checking the SRA's implementation guidance when it appears.
A question to ask: Who holds each compliance role, what can they see, and how would they challenge the person who runs the firm?
How we can help: We help you set out those arrangements and the evidence behind them, so you can explain them calmly if asked.
SQM audit
What changed: The SRA is consulting on updates to the Statement of Solicitor Competence. Supervision, technology and AI are among the areas likely to change. The consultation closes on 3 December.
A question to ask: Are our supervision records and appraisals clear about who checks whose work?
How we can help: A mock SQM audit tests supervision and file management before the assessor does.
Lexcel mock audit
What changed: Complaints handling is under the spotlight. The Legal Ombudsman's research found 54% of people who had made or considered a complaint had used AI along the way, and AI-assisted complaints can be longer and more formal. Separately, the SRA consulted over the summer on requiring firms to give clients a resolution timeline and regular updates. No outcome has been confirmed yet.
A question to ask: Does our complaints procedure say how quickly we respond, who reads a long and formal complaint, and how often the client hears from us?
How we can help: A Lexcel mock audit tests your complaints procedure, training records and supervision against the standard, with time to fix anything before the formal assessment.
Training
What changed: The Law Society's AI practice note (21 October) says solicitors stay accountable for their work whether or not AI is used, and that relying on AI to check AI output will not meet professional obligations. CILEx Regulation's AI guidance (1 October) says the same about review by a competent person. For CILEX members, the CPD declaration deadline has been extended, finally, to 4 December.
A question to ask: Does every member of staff know which AI tools are approved, what must never be pasted into them, and who checks the output?
How we can help: We run practical training for new and junior staff, including a one page AI policy that fits a small firm.
Free health check
If you only have five minutes, ask yourself:
Has our AML policy been compared with the SRA checklist?
Would a sample of recent files show the evidence our policy promises?
Can we explain who holds each compliance role and how they are kept independent?
Does our complaints procedure give clients a timeline and updates?
Do we have a written position on AI tools?
If two or more answers are "not sure", a free health check is a good place to start.
Dates for the diary
23 November: new SRA Chair, Caroline Corby, starts.
3 December: SRA competence framework consultation closes.
4 December: CILEX CPD declaration deadline (final extension).
April 2027: accountants' reports to the SRA apply.
What to watch next
The SRA's working groups on firm governance, and any timetable.
The outcome of the SRA's complaints handling consultation.
A decision on the Legal Ombudsman's proposed case fee changes.
The SRA's consultation on notifying it of mergers and when a firm starts holding client money.
Read more on the blog
Call for guest contributors
At Fraxinus Business Associates, we are continually looking to share valuable insights, expert opinions and practical strategies with our community of legal practices and small-to-medium businesses.
We are actively opening up guest contributor slots for our upcoming monthly newsletter editions, and we'd love you to contribute an article, opinion piece or short industry analysis.
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What we are looking for: Short, actionable insights (approx. 300 to 600 words) on topics such as:
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Industry trends, regulatory changes or compliance best practices
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Alternate opinions and light-hearted insights
If you'd be interested in sharing a piece or discussing a topic idea, please get in touch or let us know a convenient time to connect.
This briefing is a summary of public regulator material. It is not legal advice, and the questions above are prompts for your own planning, not regulatory requirements.
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