Three in five legal professionals (58%) are concerned that the UK government’s proposed reforms to make the Financial Conduct Authority (FCA) the single professional services supervisor could affect legal professional privilege. The finding comes from a VinciWorks and Compliance Office poll of 204 legal professionals discussing the government’s consultation and the potential transfer of AML supervision from the Solicitors Regulation Authority (SRA) to the FCA.
The results indicate a sector that is uncertain about how the proposed regulatory model will operate in practice. Two-fifths of respondents (43%) said it is too soon to tell how they feel about the FCA taking over AML supervision. Only around one in five respondents (21%) described themselves as positive or cautiously optimistic, while more than a quarter (28%) selected ‘worried’ or ‘sceptical’.
Concerns about the FCA’s approach were clear, especially the potential implications for confidentiality, the handling of privileged material and the preservation of sector-specific understanding. Ruth Mittelmann Cohen, Head of Legal Compliance at VinciWorks, noted that many firms have questions about how privilege will be protected in a very different supervisory culture.
“Many legal professionals raised the issue of legal professional privilege as their first concern. The sector is accustomed to regulators who understand legal practice and the central role privilege plays in it. With more than half of respondents reporting concern about how privilege will be managed in the future, it is clear that firms want reassurance that existing safeguards will be maintained,” said Ruth Mittelmann Cohen.
Privilege concerns formed part of a broader set of apprehensions about regulatory approach and supervisory expectations. When asked which potential impact of FCA supervision would be most significant, the largest share of respondents selected the FCA’s data and reporting requirements (29%). A further 26% identified a loss of legal-sector nuance, and 21% identified stricter enforcement or higher penalties. Cost and regulatory burden accounted for 21%.
Jennifer Dunlop, Managing Director at Compliance Office, observed that the FCA’s approach to supervision is well known to be data-led and evidence-focused. She highlighted that many firms are preparing for a model that requires clearer documentation of decision-making and greater scrutiny of case records.
“Legal professionals recognise that an FCA-led system is likely to involve more data, more evidence testing and more formalised reporting. The concern is not only about the volume of information but also about how sensitive material will be protected. With firms still working through what this transition could mean, the level of unease reported in the poll reflects a profession seeking clarity and workable safeguards,” said Jennifer Dunlop.
The poll also shows that most firms anticipate needing to invest in preparation for an FCA regime. More than half of respondents (56%) expect at least a moderate or very significant investment. A smaller proportion (23%) expect minimal or no investment, while 22% remain unsure.
Although core AML duties remain unchanged, the supervisory environment could shift in meaningful ways. Data-driven assessments, routine evidence testing, closer scrutiny of ongoing monitoring and potential dual engagement with both the FCA and legal regulators are being identified as likely features of the future model.
The consultation on the reforms is open until 24 December. VinciWorks and Compliance Office are encouraging legal professionals to respond to ensure that legal sector specific considerations, including privilege, are fully addressed in the development of the new supervisory framework.
