SRA sanctioned by LSB over Axiom Ince failures

'Binding directions' requiring the Solicitors Regulation Authority to improve the way it identifies and responds to risks have been imposed by the Legal Services Board, the oversight regulator said today. The measures follow regulatory failures identified in the independent report into the SRA's actions before the 2023 closure of Axiom Ince with the loss of £60 million in client money. 

It is the first time that the LSB has issued directions under the Legal Services Act. Announcing the measure, the LSB said the SRA must now take action to: 

• Improve how it identifies risks to consumers and be more proactive in responding to them. This includes risks arising from the corporate structure of law firms and from sales, mergers and acquisitions. 

• Strengthen the regulation of client money and ensuring firms have effective safeguards in place. 

• Strengthen controls to protect the public interest and consumer interest where there is a concentration of ownership, compliance and management roles in one person. 

The LSB said that the SRA 'has already developed a robust plan in response to the issues identified in the independent Axiom Ince report and has taken steps to begin addressing the issues identified'. 

Catherine Brown, the LSB's interim chair, said: 'The severity of what happened at Axiom Ince—with £60 million in client money missing and 1,400 people losing their jobs — demanded decisive action, and we welcome the SRA’s constructive engagement with us during this statutory process. The directions we’ve issued are designed to protect the public and better ensure client funds are properly safeguarded. 

'Over the last few months, the SRA has already started making the necessary changes to rebuild public trust and confidence in the regulatory framework that protects people who need legal services. We will continue to engage closely with the SRA in our role as its oversight regulator and will now monitor its compliance with these directions.’ 

The SRA must comply with the LSB’s directions within 12 months and provide a written report to the LSB on progress every three months. 

Law Society president Richard Atkinson welcomed the LSB's action. 'The directions reflect the unanimous feedback from those consulted that the next steps must be clear, measurable and proportionate. Many also agreed there were failings identified in the independent report into the handling of Axiom Ince and supported the firm action taken against the SRA.'

The LSB's decision 'strikes the right balance between ensuring strong consumer protection while avoiding unnecessary regulatory burdens', Atkinson said. 'The clear timelines and oversight framework will help ensure good progress is made towards restoring consumer trust and confidence in the regulator.'