The Legal Services Board is to take further enforcement action to secure urgent improvements at the Solicitors Regulation Authority, the oversight regulator revealed today.
Last year, the LSB used its powers under the Legal Services Act to issue directions requiring the SRA to strengthen its approach to identifying and responding to risk, protecting client money and preventing consumer harm. The SRA said today it had made ‘meaningful progress’ towards meeting those requirements while acknowledging that further work is required.
But an independent report into the SRA’s failure to act on warning signs before the closure of PM Law has convinced the LSB that progress is not fast enough. Client losses from the failures of Axiom Ince and PM Law are likely to come to as much as £100m.
The LSB said that the PM Law review identified weaknesses in the SRA’s approach similar to those previously identified in relation to Axiom Ince. These included shortcomings in the use of intelligence held across the SRA and the escalation of serious concerns to senior decision makers.
The LSB pointed to insufficient evidence that changes following the Axiom Ince collapse had resulted in better regulatory outcomes or improved protection for consumers. It will therefore set additional performance targets to enable more rigorous assessment of the SRA’s progress. The SRA will have to produce a single, consolidated implementation plan covering the full range of action it is taking to improve its performance.
The LSB also wants timely, independent evidence on progress with proof not only that reforms are being implemented but that they are resulting in change.
The oversight regulator added it was ‘disappointed by the standard of leadership and accountability demonstrated by the SRA board in response to the serious regulatory failures that have repeatedly occurred, at significant cost to consumers and to public confidence in the SRA’.
Meanwhile the LSB has approved the SRA’s practising fee proposals for 2026/27. Individual fees will increase by 17% to £382 as the total income from fees rises from £148.4m to £178.1m. The SRA has said it needs an additional £25m to deal with increasingly complex firm business models, technological change, firm closures and increased volumes of misconduct reports.
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