Welcome to the Regulation & Compliance Office’s final fortnightly roundup of 2025! As we approach the festive season, we want to keep you ahead and informed in the world of law and compliance.
As the year draws to a close, the RACO roundup continues to be your trusted source for staying informed about vital developments in your profession. Before we all take a well-deserved break, we have some important updates to share.
Below, you will find the most recent headlines selected by our compliance experts, followed by a Security Section with the latest scam alerts to help protect you and your clients during the festive period.
🎅 From all of us at RACO, we wish you a Merry Christmas and a prosperous New Year! 🎄
2025 Year-End Compliance Roundup: Preparing Your Law Firm for a New Era of Dual Regulation
As 2025 draws to a close, this year has been one of the most demanding for law firm compliance in recent memory. From the Mazur ruling to mounting SRA enforcement actions, and the news that the FCA will assume AML supervision, the legal sector has faced unprecedented regulatory pressure.
Key 2025 Developments
- SRA Enforcement Actions: Nearly a third of inspected firms found non-compliant with AML regulations, with fines totalling almost £1.5 million
- Source of Funds Failures: Persistent failings identified in 11% of files lacking proper checks and 18% showing inadequate scrutiny
- Mazur Litigation Ruling: Major concerns requiring urgent review of litigation supervision structures
- FCA AML Supervision: Government confirmed AML supervision will transfer to the FCA
2026: Dual Regulation Is Coming
Law firms will face a new regulatory environment in 2026, answering to two regulators with different priorities and expectations:
- The FCA for AML matters – Data-driven, risk-based approach demanding demonstrable outcomes
- The SRA for conduct and supervision – Increased focus on codes of conduct and professional standards
The challenges: Different regulatory expectations, increased reporting obligations, resource pressure, and coordination challenges across both regulatory relationships.
Why Outsourcing Makes Sense
Building in-house compliance expertise across AML, FCA supervision, SRA requirements, and GDPR would cost significantly more than outsourced solutions. RACO’s services start from just £333.33 per month, providing access to specialist compliance managers who understand what both regulators expect.
If you’ve spent 2025 uncertain about your compliance position, 2026 offers a fresh start. Contact RACO to discuss how our outsourced compliance solutions can provide the expertise and support your firm needs.
Read the full story here
Mazur Update: Should Law Firms Self-Report to the SRA? December 2025 Guidance
There have been numerous developments since the Mazur ruling, including CILEx obtaining standalone litigation practice rights, permission to appeal granted, and clarifications about Schedule 3 exemptions. The Law Society and CILEx have issued extensive guidance helping firms adapt to new working practices.
Mazur and the SRA – Self-Reporting
The SRA has published guidance stating: “If you conclude that you have been operating incorrectly in the past, you may make a self-report to us. While each case turns on its own facts, we will treat sympathetically self-reported incidences of genuine error based on mistaken interpretation of the law, prior to us publishing this page on 20 October 2025.”
Should Firms Make a Self-Report?
Firms face two options:
- Do Not Report: Some firms may interpret the word “may” as an invitation not to report, recording the breach internally while remaining compliant going forward.
- File a Self-Report: Risk-averse firms may choose to self-report, expecting a sympathetic response and likely receiving a private warning rather than published enforcement action.
What’s clear: firms must be fully compliant post-20 October 2025, and any breach should be documented with evidence of corrective measures taken, regardless of whether formally reported to the SRA.
Read the full alert here.
It’s Time to Review Your Terms of Business as the FSCS Compensation Limit Increases
On 1 December 2025, the Financial Services Compensation Scheme (FSCS) limit increased from £85,000 to £120,000 per individual and per institution in the event of a bank collapse. This significant change requires immediate attention from law firms.
Who is covered?
Eligible claimants include:
- Individuals
- Small and large companies (some exclusions may apply)
- Small local authorities (such as parish councils)
Important note: The limit applies per institution, not per account. If you hold other client money in the same bank as your client account, the total protection remains £120,000.
Temporary high balances
The FSCS also provides up to £1.4 million protection for temporary high balances related to specific life events (natural persons only), such as property sales, inheritance, or insurance payouts.
Action required
Firms must review and update their terms of business and client care letters to reflect the new £120,000 compensation limit. Ensure you’re providing accurate information to clients about FSCS protection.
RACO’s Client Care drafting service can help ensure your documentation is fully compliant with the updated FSCS limits.
Read the full story here.
Scam Alerts
⚠️ Warning: Emails misusing the name of Cheshire Estate and Legal Limited (trading as CEL Solicitors)
The Scam:
Emails have been sent to members of the public falsely claiming to be from Cheshire Estate and Legal Limited, misusing the name of a genuine solicitor in relation to returning supposedly lost cryptocurrency funds.
The fraudulent emails have been sent from ‘tylersmith14777@gmail.com’ and ‘dropstab.tylersmith@gmail.com’, with subject heading: ‘CEL Solicitors – Official Notification: Verification and Transfer of Frozen Cryptocurrency Assets’.
Important: The SRA does not authorise or regulate an individual solicitor named ‘Tyler Smith’. Any business through the above email addresses is not undertaken by a genuine SRA-regulated solicitor.
Genuine firm details:
The genuine Cheshire Estate and Legal Limited (trading as CEL Solicitors) uses the email domain @celsolicitors.co.uk and website www.celsolicitors.co.uk. Head office: 20 Chapel Street, Liverpool, L3 9AG. Tel: 0151 909 8212.
What to do:
Do not respond or share personal/financial information. Always verify firms independently using the SRA register and established contact details. If in doubt, contact the SRA directly.
Read the full alert here.
⚠️ Warning: Email claiming to be from ‘John Nuer’ of ‘RT Legal Solicitors’
The Scam:
The SRA has seen emails claiming to be from ‘John Nuer’ purporting to be ‘Attorney John Nuer, a solicitor at law’ at ‘RT Legal Solicitors’.
The email refers to an alleged inheritance of £10.6 million and offers to help the recipient access the inheritance in return for a percentage of the funds.
The fraudulent communication includes:
- Telephone: +1 319 254 9162 (US)
- Telephone: +44 7440 748265 (UK)
- Email: attorney.john@realtimelawyers.org
Important: The SRA does not authorise or regulate a solicitor called ‘John Nuer’ or a firm called ‘RT Legal Solicitors’. Any business through these contact details is not undertaken by any SRA-regulated individual or firm.
What to do:
Do not respond, click links, or share information. Conduct your own due diligence by independently verifying any firm or solicitor via the SRA register. Be especially wary of unsolicited inheritance claims.
Read the full alert here.
BEEN CONTACTED? Here’s What to Do…
When a firm’s or individual’s identity has been copied or cloned, due diligence is necessary. If you receive correspondence you believe to be suspicious, you should conduct your own due diligence by checking the authenticity of the correspondence by contacting the law firm directly by reliable and established means.
🎅 Season’s Greetings from RACO! 🎄
As 2025 comes to a close, we want to thank you for your continued trust in RACO. This has been our final roundup of the year, and we’ll be back in your inbox in January 2026 with more essential compliance updates.
Wishing you and your team a wonderful Christmas break and a successful New Year! ⭐
See you in 2026! ❄️
