SRA Launches comprehensive review of consumer protection in legal services

The Solicitors Regulation Authority (SRA), the regulatory body overseeing law firms and solicitors in England and Wales, has announced a comprehensive review of its consumer protection approach. The initiative responds to the dynamic and shifting risks within the legal sector, aiming to enhance safeguards for clients.

The review concentrates on two pivotal areas. Firstly, the SRA seeks to minimize the risk of harm to consumers arising from issues within regulated law firms. This involves an examination of risk identification processes, firm monitoring and approval, as well as rules and controls concerning the handling of client money by firms.

Secondly, the review delves into the compensation fund arrangements. This fund acts as a safety net, compensating consumers in cases where money has been lost due to solicitor dishonesty or firm collapses. With an increasing number of claims, the SRA aims to strike a balance between robust consumer protections and preventing excessive escalation of legal service costs.

The review follows significant changes in the legal landscape, including a notable rise in interventions by the SRA to close down firms, particularly larger ones such as Axiom Ince, where the impact on consumers is more substantial.

To address higher-risk areas, the SRA has already implemented changes, such as increased inspections for rapidly growing 'accumulator' firms. The review will involve in-depth research with consumers to understand their priorities and extensive engagement with consumer groups and the legal profession to devise an effective long-term strategy.

Anna Bradley, Chair of the SRA Board, emphasizes that consumers are at the core of the review, seeking the right balance between preventing firm failures and protecting consumers. The SRA aims to gather diverse perspectives on crucial questions related to the compensation fund's affordability, the model allowing firms to hold client money directly, and the need for additional checks on firms acquiring others.

Paul Philip, Chief Executive of the SRA, highlights ongoing changes in risk monitoring and a commitment to swift adjustments benefiting the public. The review will involve engagement with legal and consumer groups through roundtables and webinars to ensure a well-rounded assessment.

As the legal landscape evolves, the SRA's consumer protection review marks a proactive step to ensure confidence and trust in legal services, aligning regulations with emerging challenges and consumer expectations.

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