On 28 April 2026, the Legal Services Board (LSB) discussed the SRA’s regulatory performance.
With one month until the deadline for SRA’s compliance with LSB’s Directions regarding Axiom Ince Limited, the LSB Board has this week asked the SRA to commission an independent external audit to assess and evaluate the SRA’s compliance with the Directions. The report is to be made available to the LSB by the end of June.
The LSB is deeply concerned about the failure of PM Law Limited. The cumulative loss of client money associated with Axiom Ince and PM Law now stands at approximately £100m. The LSB has noted that the SRA has commissioned an independent review into its handling of PM Law, due within the coming weeks.
Alongside the actions relating to these specific cases, the LSB Board is also concerned about the likelihood of further significant failures in this class of case, and the pressing need for urgent action to protect consumers.
The LSB will require closer scrutiny and oversight of the SRA’s handling of known higher-risk firms. The LSB will exercise its formal information-gathering powers under section 55 of the Legal Services Act 2007 to obtain further information from the SRA on how it will handle and manage higher-risk firms, how it will mitigate the risks, and, crucially, how it will protect consumers at known risk of harm.
The SRA is under three statutory enforcement measures, which is exceptional in the history of legal services regulation. The LSB Board is clear that regulatory action by the SRA must be urgent and immediate. This week, the LSB Board asked the SRA Board to provide assurance, in an in-person meeting before the end of May, that it has the necessary expertise and oversight approach to deliver the urgent reform needed to address the challenges and complexities in the sector.
Monisha Shah, Chair of the Legal Services Board, said:
“The LSB’s primary concern is consumers: those who have already suffered harm and those who remain at risk. People must be able to use legal services with confidence that effective regulation is in place to protect them, particularly from loss arising from alleged criminal activity.”
The LSB does not anticipate commenting further on these statutory enforcement matters until it has concluded its discussions with the SRA and considered further actions at the LSB Board meeting on 21 July 2026.
Current enforcement measures against the SRA
The SRA is currently subject to three concurrent statutory enforcement measures, which is exceptional in the history of legal services regulation:
- Directions (May 2025): Statutory Directions issued under section 32 of the Legal Services Act 2007 following the LSB’s independent review of the SRA’s handling of the Axiom Ince collapse. The Directions require the SRA to make specific and substantial improvements to its supervisory approach. The compliance deadline is 28 May 2026
- Performance target (March 2026): Issued under section 31 of the Legal Services Act 2007 following regulatory failures identified in connection with the SSB Group case
- Public censure (March 2026): Issued under section 35 of the Legal Services Act 2007, also in connection with the SSB Group case, drawing public attention to the SRA’s regulatory failures
The LSB is separately and closely scrutinising the SRA’s response to the collapse of PM Law Ltd, including what the SRA knew, when it knew it, and what action it took.
LSB enforcement powers under the Legal Services Act 2007
The LSB’s enforcement powers are set out in its Statement of Policy for Enforcement. All enforcement action must be proportionate, consistent, transparent, and targeted only at cases where action is needed.
- Performance targets and monitoring (section 31): Used where a regulator is failing in a specific area with a clear and measurable impact on the regulatory objectives
- Directions (section 32): Used to require specific actions to rectify identified failures. Non-compliance can lead to further enforcement action, including financial penalties
- Public censure (section 35): Used to draw public attention to regulatory failures, with the aim of driving improvement
- Financial penalties (section 37): May be imposed for failure to comply with Directions or internal governance rules. The maximum penalty is 5% of the regulator’s income from regulatory functions in its most recent accounting period
- Intervention directions (section 41): An extreme measure used only in serious circumstances where other tools are inadequate. An intervention direction can enable the LSB or a nominated person to take over one or more of the regulator’s functions
- Cancellation of designation (sections 45 and 76): The most serious sanction available, used only in exceptional circumstances where no other enforcement power would adequately address the issues
Information gathering powers
Information gathering (section 55 of the Legal Services Act 2007): Gives the LSB formal powers to require an approved regulator to provide information or documents. The LSB may use these powers in connection with carrying out its functions.