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SRA ‘must change’ after Axiom failings

A report commissioned by Britain’s main legal-services regulator has sharply criticised the Solicitors Regulation Authority (SRA) for its handling of an investigation into Axiom Ince. 

The law firm stopped trading in October 2023, leaving around Stg £60 million in client money missing and leading to the loss of around 1,400 jobs. 

The Legal Services Board (LSB) says that it will now take enforcement action against the SRA, after carrying out the required consultations with other authorities.

“The directions, if imposed, would be aimed at requiring the SRA to make changes to better achieve the regulatory objectives,” the board said. 

‘Actions and omissions’ 

Belfast-based law firm Carson McDowell LLP carried out the review, finding that, in the lead-up to the SRA’s closure of Axiom Ince in October 2023: 

• The SRA did not act adequately, effectively and efficiently,
• The SRA did not take all the steps it could or should have taken, and
• The SRA’s actions and omissions in this matter necessitate change in its procedures to mitigate the possibility of a similar situation arising again. 

“The SRA’s actions and omissions have, in our view, adversely impacted on confidence and trust in the regulation of legal services,” said LSB chair Alan Kershaw. 

President of the Law Society of England and Wales Richard Atkinson said that the report painted “a vivid picture” of the SRA’s inadequate and ineffective handling of Axiom. 

‘Profession shoulders cost’ 

“Ultimately, it has fallen to the profession as a whole – solicitors and law firms – to shoulder the cost through a substantial increase in contributions to the Compensation Fund, which is a vital protection for clients and consumers,” he stated. 

'While the events leading to Axiom’s collapse were happening, the SRA was focused on increasing its fining powers and proposing regulatory expansion, rather than tackling the known risks from accumulator style firms and ensuring its operations were joined up and laser-focused on protecting consumers,” Atkinson continued. 

'The problems identified in the report can be fixed, but the LSB must insist that the SRA puts its house in order,” he said.