LSB calls for stronger SRA action

The Legal Services Board (LSB) has announced its decision to escalate enforcement actions aimed at ensuring urgent improvements at the Solicitors Regulation Authority (SRA). This comes in the wake of a significant independent review into the 2025 failure of Axiom Ince, where the loss of £60 million in client funds highlighted critical regulatory issues. The LSB, leveraging its powers under the Legal Services Act 2007, mandated the SRA to enhance risk identification, client money protection, and consumer harm prevention, with a deadline set for June 2026.

Following Axiom Ince's collapse, there have been further law firm failures, notably the decline of SSB Law, which resulted in the LSB imposing performance targets on the SRA and executing a public censure. Concerns have only intensified with the February 2026 collapse of PM Law Group, prompting serious questions regarding the SRA's regulatory timeliness and effectiveness, especially concerning consumer and client fund safety. As the LSB states, "Strong, effective regulation is essential to consumer protection and a well-functioning legal services market."

The LSB has conducted a comprehensive assessment of the SRA's efforts to comply with its Directions. This review involved examining findings from two independent reports—the Serious Event Review by Jenner & Block LLP and an assessment by Berkeley Partnership—both highlighting critical shortcomings within the SRA. The Jenner & Block report revealed similar weaknesses to those identified during the Axiom Ince review, such as ineffective intelligence use and inadequate escalation of serious issues to senior management. Alarmingly, these issues have been acknowledged by the SRA since 2023.

Despite some progress reported by the Berkeley Partnership in reinforcing the SRA's frameworks, it concluded that there is still a lack of evidence demonstrating that these reforms are yielding the intended consumer protections as stipulated. Since the failures associated with Axiom Ince and PM Law, approximately £100 million of client money has been lost, underscoring the urgency of the situation.

The LSB's review period for the Directions has expired, leading to the conclusion that the SRA is not consistently delivering improved outcomes for consumers. Thus, the LSB intends to intensify its oversight, planning to establish additional performance targets that facilitate rigorous assessments of the SRA's progress. The LSB will also maintain existing Directions and will require the SRA to produce an implementation plan detailing all actions being undertaken to improve performance.

To effectively protect consumers, the SRA will require additional investments aimed at enhancing its regulatory capabilities. The LSB has approved the SRA's 2026/27 practising fee application, focused on strengthening these capabilities. However, accountability is critical, with the LSB determined that both consumers and the public must witness tangible improvements from this additional funding.

The LSB's strengthened measures aim to fulfil two main objectives: to support the progress the SRA has made while ensuring it has the necessary resources for further improvement, and to sharpen focus on immediate, measurable enhancements in performance. Effective leadership from the SRA Board is paramount to oversee these significant changes and to address the disappointing levels of accountability exhibited thus far.

The LSB remains committed to working collaboratively with the SRA towards achieving necessary reforms aimed at providing enhanced consumer protections. However, as the LSB indicates, if adequate progress isn’t demonstrated, it stands ready to consider further interventions to safeguard the public and consumers effectively.