The compliance officer split has final approval, and on 2 September the regulator moved to calm the small firms it had alarmed. The Legal Services Board granted the Solicitors Regulation Authority's application on consumer protection with effect from 31 July 2026. New rules 8.4 to 8.7 of the Authorisation Rules stop an owner or manager who can unilaterally direct the running of the firm from holding the compliance officer roles once the firm passes a turnover or client money threshold. The Law Society Gazette reported that the SRA accepts firms were unclear what the rule meant in practice, that guidance follows this autumn, and that the changes phase in during early 2027 with smaller firms allowed longer to comply. In a large share of firms the person losing the compliance role is the one who has been signing off the AI.
Which firms the rules reach
The turnover threshold sits at £600,000 in the most recently completed accounting period, and the client money threshold at a maximum balance above £2,000,000 at any point in that period. Where a firm has more than one manager or owner and passes either test, nobody with authority to unilaterally determine or direct significant management decisions about the structure or running of the firm can be designated as COLP or COFA. A sole owner-manager above the turnover threshold loses both roles. One who passes only the client money test gives up the COFA role and keeps the COLP role. A narrow carve-out covers a balance pushed over the line by transactions outside the firm's usual business, and relying on it means telling the SRA promptly and keeping a written record.
The SRA estimates that around 4,100 firms, some 45 per cent of the sector, fall within the eligibility criteria, and that around 1,660 firms together with 431 sole owner-manager firms will need to take action. It holds limited information on how firms are governed, so treat those numbers as an estimate.
The regulator has since drawn the boundary more plainly. It catches a person who can make significant management decisions alone, meaning how the firm is structured and run, how it is governed or manages risk, and how it holds client funds, rather than every senior manager or owner. Aileen Armstrong, its executive director for strategy and policy, said that a firm already built on shared responsibility will in many cases need no further change.
Why this lands on your AI decisions
The regulator's own guidance puts the COLP at the centre of technology. Its compliance tips for solicitors on the use of AI and technology, updated on 9 February 2026, expect the compliance officer for legal practice to be responsible for regulatory compliance when new technology is introduced. In an owner-managed firm those two people have been one person. The owner picked the tool, signed the contract, set the rule about what staff put into it, and answered for what came out. That arrangement ends for the compliance half of the job as the rules phase in.
What the owner keeps is the buying decision. What moves is the job of showing the SRA that the firm's use of AI meets its obligations. Where your AI governance lives in the owner's head as a habit rather than a document, the handover loses it, and the incoming COLP inherits the duty without any of the reasoning behind it. The first time that gap shows will be in a complaint or in a supervision visit, which is a poor moment to find out that nobody wrote the rule down.
What to settle now
Write down what the owner has been carrying. That means the tools staff may use and the ones they may not, the rule on client material, and who checks output before it leaves the firm. Add what training people had and when, together with the supplier terms you accepted on retention and on training the model. A firm with an AI use policy already holds most of this. A firm running on the owner's judgement holds none of it on paper.
Then give the incoming compliance officer authority to match the title. These rules exist because the SRA found people overseeing and reporting on their own decisions, and a COLP who cannot stop the owner buying a tool reproduces that problem in a new shape. Settle in writing that a new AI tool reaches the COLP before anyone signs for it, and that the COLP can suspend one that is causing trouble.
Firms near the £600,000 line have a further decision, because the test runs on the most recently completed accounting period and the answer changes from year to year. Work out which side of it your last accounts put you on, and where the margin is thin, plan for the year that takes you over rather than the year that does not.
The decision notice is published free to read on the Legal Services Board website as the SRA consumer protection decision notice, a 22 page PDF with the approved rules attached, and the Law Society Gazette reported the regulator's clarification on 2 September 2026.
If your firm passes either threshold and the AI rules sit in the owner's head rather than on paper, this is the handover we write with firms while there is still time to do it calmly: talk it through with us.