The Solicitors Regulation Authority (SRA) has secured approval for a significant increase in the compensation fund fee to address the financial impact caused by Axiom Ince. This dramatic 270% rise in contributions aims to replenish the fund after considerable payouts. The approval has raised concerns, amidst ongoing investigations into the SRA’s handling of past interventions. Firms, regardless of size, will face a uniform fee increase.
- The Solicitors Regulation Authority gains approval to significantly raise compensation fund fees.
- A 270% fee hike is implemented to cover the financial aftermath of Axiom Ince.
- The decision arrives during an ongoing investigation into SRA’s organisational conduct.
- The fee structure does not differentiate between firms of different sizes.
- The Legal Services Board has endorsed the changes, citing public protection needs.
The Solicitors Regulation Authority (SRA) has received authorisation to escalate compensation fund fees by an unprecedented 270% in response to financial burdens posed by the Axiom Ince intervention. This increase, effective for the 2024/25 period, has been ratified by the Legal Services Board (LSB), elevating total contributions from £10 million to £31.6 million. Accordingly, individual contributions will rise from £30 to £90, while firms will contribute £2,220 instead of the previous £660.
This dramatic escalation is primarily to counteract the deficit in the compensation fund, necessitated by £41.1 million in grants disbursed in the 2022/23 period due to misconduct by solicitors, specifically linked to Axiom Ince. The timing of this adjustment, however, has sparked controversy as it coincides with an LSB investigation into the SRA’s management of the Axiom Ince collapse.
Despite the ongoing review, the LSB’s decision notice refrained from addressing any potential mismanagement directly, affirming that the SRA’s proposals did not warrant rejection under existing conditions. It emphasised the necessity of the increase to maintain public confidence and safeguard client interests within the legal services sector.
The uniform fee across all firms, irrespective of size, has been contentious. The LSB acknowledged the impact on smaller practices and has urged the SRA to evaluate the fairness of this structure. Additionally, the SRA has expanded its executive team with experienced financial management professionals to oversee the fund’s administration.
Ian Jeffery, Chief Executive Officer of the Law Society, expressed significant concern regarding the increased contributions, attributing the need for funds largely to the Axiom Ince debacle. Jeffery emphasised the urgency for the LSB to publish its independent review, allowing the sector to derive essential lessons from past events.
The approval of increased contributions underscores the necessity for transparency and strategic management within the legal services sector.
