A recent report commissioned by the Legal Services Board (LSB) has criticised the Solicitors Regulation Authority (SRA) for failing to take adequate measures to prevent the collapse of the law firm Axiom Ince.
The Solicitors Regulation Authority (SRA) has come under scrutiny following the collapse of Axiom Ince, a law firm that ceased trading in October 2023, resulting in £60 million of client money going missing and 1,400 employees losing their jobs. An investigation by the Legal Services Board (LSB), conducted by Northern Irish law firm Carson McDowell, found that the SRA “did not take all the steps it could or should have taken.”
The LSB has now decided to enforce actions against the SRA, aiming to issue directions under the Legal Services Act 2007. These directions are intended to ensure that the SRA adopts better practices to achieve regulatory objectives, including protecting the public interest and consumer rights.
This marks only the second time in its 15-year history that the LSB has used its enforcement powers. While the SRA was praised for uncovering the suspected fraud, the report criticized its failure to act efficiently and effectively, leading to a significant loss of trust in legal services regulation.
SRA Chief Executive Paul Philip acknowledged the complexity of the fraud involved but expressed disagreement with some of the report’s findings. He argued that the regulation cannot prevent all harms, although some procedural improvements were acknowledged.
In light of the Axiom Ince incident, the SRA is looking towards changes, including potentially stopping law firms from holding client money. This follows a wider consumer protection review that began earlier this year. The organisation is also investing in technology to improve its use of data to identify patterns of risk in the legal sector.
The LSB’s investigation was extended to include the collapse of another firm, SSB Law. The findings of the Axiom Ince review have prompted a reassessment of the probe’s scope.
Public reaction to the SRA’s actions has been critical, with campaigns such as ‘UK Justice Is Broken’ calling for a public inquiry into the SRA’s effectiveness.
The scrutiny faced by the SRA over its handling of the Axiom Ince collapse has highlighted the need for significant regulatory improvements. As the legal landscape continues to evolve, the SRA’s ability to effectively protect public interests remains under the microscope.
