The compliance officer split is on hold. On 30 September the Solicitors Regulation Authority paused the rules that would stop an owner who runs a firm from also acting as its compliance officer, four weeks after it had tried to calm small firms by narrowing who the rules caught. The Legal Services Board approved them with effect from 31 July 2026, and the phasing was due to start in January. Aileen Armstrong, the regulator's executive director for policy and strategy, said it would consult over the coming weeks on options for changing its approach and meeting the same objective in a proportionate way.
A backlash forced the pause, and it grew fast. The SME & Boutique Law Firm Alliance, formed to fight the rules, can call for a vote of no confidence in the SRA board at the Law Society's annual general meeting in October. It has said it will keep that call, because its complaint reaches wider than compliance officers. The Law Society, which put forward a targeted risk model as its alternative in September, welcomed the decision and asked for significant changes. The SRA has set no timetable, and Legal Futures judges it highly unlikely that the regime starts in January 2027 if the changes need fresh approval from the Legal Services Board.
What the approved rules say
As approved, the rules bite once a firm with more than one manager or owner passes either of two tests, being turnover above £600,000 in its last completed accounting period or a client money balance above £2,000,000 at any point in that period. Nobody who can unilaterally direct significant decisions about how the firm is structured, run or governed, or how it holds client money, can then be its COLP or COFA. A sole owner-manager above the turnover line loses both roles, while one who passes only the client money test gives up the COFA role and keeps the COLP role.
The SRA estimated that around 1,660 firms and a further 431 sole owner-manager firms would need to act, and it told the Legal Services Board it held limited information on how firms are governed. Those are the firms now waiting to learn what the consultation changes.
Why this still lands on your AI decisions
The regulator's compliance tips on AI and technology, updated on 9 February 2026, expect the COLP to answer for regulatory compliance when a firm brings in new technology. In an owner-managed firm the person who chose the tool, signed the contract, set the rule on client material and answered for the output has been the person holding that role. The rules as approved would split those jobs, and the pause leaves open whether, when and for which firms that happens.
The uncertainty does not touch the duty. Whoever holds the COLP role today must be able to show the SRA that your use of AI meets your obligations. Where that governance lives in the owner's head as a habit rather than on paper, a supervision visit or a complaint finds the gap whatever the consultation decides.
What to do while the SRA consults
Keep the work that pays off under any version of the rules, and pause the work that only one version requires. Write down what the owner has been carrying, meaning 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. That record serves a COLP who stays in post as well as one who replaces the owner.
Hold back on the expensive step. If you were preparing to recruit or promote someone into the COLP or COFA role solely to meet the January phasing, wait for the options the SRA puts out, because the thresholds and exemptions are the parts most likely to move. The decision notice records that a firm replacing a compliance role holder before the separation takes effect must meet the new rules from January 2027, so check that point again before you change who holds either role.
Then take part. The SRA says it will consult stakeholders actively over the coming weeks, and a small firm that explains how its AI decisions and its compliance oversight work in practice gives the regulator evidence it has admitted it lacks.
Legal Futures reported the pause on 30 September 2026 in SRA announces pause to compliance officer rule changes, open to any reader, and the Law Society Gazette carried the regulator's statement the same day. The rules as approved are in the SRA consumer protection decision notice, a 22 page PDF free to read on the Legal Services Board website.
If your AI rules sit in the owner's head rather than on paper, we write that record with firms so it holds whichever way the consultation goes: talk it through with us.
