This guide is written for solicitors, trainees and law students in England and Wales.
Whether you can be a COLP or COFA now turns on two things: the size of your firm and the extent of your own authority within it. In firms with more than one manager or owner, where turnover exceeds £600,000 or the firm has held more than £2m in client money, anyone able to determine or direct significant management decisions is barred from both compliance roles.
Who is this guide for?
Anyone who currently holds a compliance role, anyone who might be asked to take one, and anyone responsible for deciding who does. That includes managing partners and directors who hold the COLP or COFA title alongside running the business, since they are the people most likely to become ineligible, and it includes finance directors and compliance managers who may find themselves nominated at short notice. Sole practitioners need this too, because the partial exemption for sole owner-manager firms is narrower than the phrase suggests.
The guide covers eligibility only. If your question is about the parallel change to accountants’ reports, our accountants’ report checklist handles the filing side of the same package.
What changed on 31 July 2026?
The Legal Services Board granted the SRA’s application to alter its regulatory arrangements, which the regulator had submitted on 29 May 2026 under the heading of consumer protection, and the grant covered both the compliance officer eligibility rules and the accountants’ report rules together. Approval was the last hurdle. The rules exist and are settled in substance, and the only thing still missing is the date they bite, which the SRA has described as early 2027 without publishing a commencement timetable or any transitional arrangements for people already in post. We reported the decision and will update this guide when a date appears.
Which firms are inside the thresholds?
Two gateways have to be passed before the restriction applies at all. The firm must have more than one manager or owner, and it must cross at least one of the financial thresholds, which are annual turnover above £600,000 or client money held above £2m during the relevant accounting period. Note that the client money threshold looks at the amount held rather than a year-end balance, so a firm whose client account peaks during a busy completion month can cross the line without ever showing £2m on a balance sheet.
| Firm profile | Turnover over £600,000? | Client money over £2m? | Position |
|---|---|---|---|
| More than one manager or owner | Yes | Either | Significant decision-makers barred from COLP and COFA |
| More than one manager or owner | No | Yes | Significant decision-makers barred from COLP and COFA |
| More than one manager or owner | No | No | No restriction |
| Sole owner-manager, beneath the thresholds | No | No | Partial exemption: owner may remain COLP, but not COFA |
The £2m figure is the concession the SRA made after consultation, having originally proposed £500,000, and raising it cut the number of smaller firms in scope from 1,302 to 576 while still covering around 99% of all client money held across the profession. The SRA has so far published only a high-level description of how the sole owner-manager exemption operates, so check the precise wording against the rules once they are published if your firm sits close to either line.
What counts as a significant management decision?
Watch the wording, because it moved. The December 2025 consultation targeted managers who could “unilaterally” determine or direct significant decisions, whereas the SRA’s June statement describes the test as reaching individuals who can make significant decisions about how the firm is run, with no qualifier about acting alone. Read strictly, the second formulation catches most equity partners and most board members in a firm of any size, which is exactly why the reform drew the objections it did.
The regulator has said it will not set prescriptive criteria for who is caught, leaving firms to assess their own arrangements, and that flexibility cuts both ways. Nobody will tell you that your finance partner is ineligible, and nobody will confirm in advance that your head of risk is safe. Decisions about the structure or running of the business are the category to think about, which in practice means partner admissions and exits, large financial commitments, mergers and acquisitions, and the allocation of profit.
How to check your firm’s position
- Confirm whether the firm has more than one manager or owner, since a genuine sole owner-manager firm follows a different rule.
- Take turnover for the most recent accounting period and compare it against £600,000.
- Take the highest client money balance held during that period, not the closing balance, and compare it against £2m.
- List everyone who can determine or direct significant management decisions about the structure or running of the business.
- Check that list against your current COLP and COFA. If either name appears on both, you have a change to make.
- Identify credible alternatives, remembering that the role needs enough seniority to challenge the people running the firm and enough time to do the job properly.
- Plan the SRA approval application, since the nominated individual cannot take up the role until the regulator approves them.
- Diarise a check for the commencement announcement, and revisit the thresholds at each year end.
Common mistakes
- Relying on the word “unilaterally”. It appeared in the consultation and does not appear in the way the SRA now describes the test.
- Reading the thresholds as cumulative. Either one triggers the restriction on its own.
- Using the year-end client account balance. The test looks at money held during the period.
- Treating a COFA swap as an internal reshuffle. Every role holder needs SRA approval before taking up the post.
- Appointing someone junior to solve the problem. A compliance officer with no standing to challenge the managing partner recreates the risk the rule was written to remove.
- Waiting for the commencement date before starting. Firms that begin looking in December will be competing for the same small pool of candidates.
- Forgetting the other half of the package. The same decision brought in annual accountants’ reports for every firm holding client money, backed by fixed financial penalties.
Official sources
- Legal Services Board, closed applications register, recording the grant of 31 July 2026.
- SRA news release of 2 June 2026 on strengthening client money safeguards.
- SRA consultation on client money in legal services, which ran from December 2025 to 20 February 2026 and carries the consultation outcome.
- Our news coverage of the accountants’ report changes.
Date last updated: 17 August 2026. This guide will be revised when the SRA publishes a commencement date and the transitional arrangements for existing role holders.