'Light-touch' oversight of SRA no longer fit for purpose after failures

The established system of ‘light touch’ oversight of the Solicitors Regulation Authority is no longer fit for purpose in the light of recent failures, the Law Society has argued.

The Legal Services Board and its work overseeing frontline regulators is currently under review by the Ministry of Justice to ensure it is operating effectively.

In its response to the MoJ's call for evidence, the Law Society said the LSB needs to refocus on its core role and hold frontline regulators to account.

Given the SRA’s failings in the last two years to deal adequately with the Axiom Ince and SSB Law collapses, the model of oversight regulation needs to be ‘more robust’ to ensure that lessons have been learnt.

Society president Mark Evans said: 'The LSB’s "light touch" assurance model adopted in 2022 is problematic as it relies on frontline regulators self-reporting the adequacy of their performance, with no absolute requirement for evidence. It has also led to the LSB forming an overall positive view of the SRA’s regulatory abilities based on information provided to it by the SRA, all while major regulatory failures were taking place.

‘The LSB should prioritise its core regulatory oversight role by setting expectations, gathering and evaluating independent evidence, and intervening where standards are not met or where new risks are identified.’

Although the LSB did not explicitly say it would take a light touch approach, in its revised regulatory framework it talked of the need for ‘proportionate and targeted’ use of its powers. The approach talked of using the ‘least intrusive measure that we think will be effective at achieving the required improvement’.

Under this approach, the SRA initially received a glowing performance review, being one of only two frontline regulators to achieve top ratings in the LSB’s annual assessment in February 2024. This assessment gave green ratings and concluded that the SRA’s performance ‘raises no concerns’.

By that time, Axiom Ince had already gone into administration, and in October 2024 an LSB-commissioned report found a catalogue of failures in how the firm was handled. A similarly damning assessment was made a year later about how the SRA responded during the collapse of Sheffield firm SSB Law. Last week the SRA received a formal censure from the LSB which said that the standard of regulation was ‘not acceptable’.

A sign of how the LSB approach has changed to become more proactive came last week, when it emerged the oversight regulator had demanded the SRA outline what had been done in the build-up to the sudden closure of the PM Law Group.