The Legal Services Board (LSB) has decided to initiate further enforcement action to secure urgent improvements at the Solicitors Regulation Authority (SRA).
In 2025, following an independent review into the failure of Axiom Ince and the loss of £60m of client money, the LSB used its powers under the Legal Services Act 2007 to issue Directions to the SRA. These Directions required the SRA to strengthen its approach to identifying and responding to risks, protecting client money, and preventing consumer harm. The LSB required these improvements to be delivered by June 2026.
Since the failure of Axiom Ince, further law firm failures have occurred. The collapse of SSB Law led the LSB to impose performance targets on the SRA and to issue a public censure.
In February 2026, the collapse of PM Law Group reinforced concerns about the effectiveness and timeliness of the SRA’s regulatory intervention where consumers and client funds may be at risk.
Strong, effective regulation is essential to consumer protection and a well-functioning legal services market. Regulatory failures can undermine trust, inhibit innovation and ultimately increase costs for consumers. While no regulatory regime can eliminate the potential for firm failure, regulators have a responsibility to identify warning signs and take proportionate, effective action to mitigate risks, protect consumers, and reduce the likelihood and impact of avoidable harm.
The LSB has assessed the effectiveness of the steps taken by the SRA to meet the Directions and improve its regulatory approach. In doing so, we have reviewed the findings of two independent reports commissioned by the SRA:
- A Serious Event Review conducted by Jenner & Block LLP into the SRA’s regulation of PM Law.
- An independent assessment by Berkeley Partnership of the SRA’s progress in meeting the Directions issued by the LSB following the failure of Axiom Ince.
The Jenner & Block review identifies weaknesses in the SRA’s approach that are similar to those previously identified in relation to Axiom Ince. These include shortcomings in (a) the effective use of intelligence held across the SRA, (b) the investigation of complex financial risks, and (c) the escalation of serious concerns to senior decision makers. Importantly, some of these issues have been known to the SRA since 2023.
The Berkeley Partnership review found that the SRA has made progress in strengthening its processes, controls and frameworks. The LSB welcomes this progress and recognises that it reflects a positive direction of travel. However, the review also concluded that there is not yet sufficient evidence that these reforms have resulted in better regulatory outcomes or improved protection for consumers, as required under the Directions.
The scale of the harm shows why this matters. The cumulative loss of client money associated with Axiom Ince and PM Law is approximately £100 million.
Further Action
The Directions were required to have been met within 12 months. That period has now expired and the LSB has considered whether the Directions should be removed, maintained or supplemented by additional measures.
Having reviewed the available evidence, the LSB has concluded that there is not sufficient evidence to demonstrate that the changes introduced by the SRA are consistently delivering improved outcomes for the public and consumers.
Significant performance challenges remain in areas including pace of regulatory action, organisational focus, specialist capability, systems and governance.
The LSB has therefore decided to strengthen our oversight of the SRA in the following ways:
- Subject to the relevant statutory process, we anticipate urgently setting additional performance targets to enable more rigorous assessment of the SRA’s progress and to intensify regulatory oversight.
- We will keep in place the Directions and performance targets already imposed.
- We will require the SRA to produce a single, consolidated implementation plan covering the full range of action it is taking to improve its performance and meet the requirements of the Directions and performance targets.
- We will require more frequent independent assurance to provide evidence not only that reforms are being implemented, but that they are delivering the outcomes required. This will ensure that the LSB receives timely, independent evidence on progress and can take further action if necessary.
Investing in regulation that delivers for the public
The SRA requires further investment to strengthen its systems, capabilities and capacity to protect consumers effectively.
Separately to this anticipated enforcement action, the LSB has approved the SRA’s 2026/27 practising fee application, which includes proposals for additional investment in regulatory capability.
However, it is essential that consumers, the profession and the wider public can be confident that this additional funding delivers tangible improvements and represents value for money.
We anticipate requiring the SRA to demonstrate what difference the additional funding is making for consumers and that it is being used efficiently and cost-effectively, as part of any new performance targets.
We will not judge success simply by whether the additional money has been spent. We will take account of what has changed as a result.
Oversight and Accountability
The purpose of this strengthened package of measures is twofold:
- To recognise and support the progress the SRA has made and ensure it has the capability and resources required to deliver further improvement.
- To secure a significantly sharper focus on urgent, measurable improvements in performance, including earlier identification of risk, faster intervention where consumers or client money may be at risk, and stronger protection of the public interest.
Delivering these changes cannot rest solely with the SRA’s executive team. The SRA Board must provide visible leadership and effective challenge, oversee the implementation of reforms and satisfy itself that the necessary improvements are being delivered with urgency.
The LSB is disappointed by the standard of leadership and accountability demonstrated by the SRA Board in response to the serious regulatory failures that have repeatedly occurred, at significant cost to consumers and to public confidence in the SRA. Under the Legal Services Act 2007, the LSB does not have powers to determine the membership of the SRA Board.
The LSB’s objective is for the SRA to succeed in delivering the changes required and to become a stronger, more proactive regulator that provides better protection for consumers and the public.
The LSB will continue to work constructively with the SRA towards that goal while maintaining robust and independent oversight in the public interest. If sufficient progress is not demonstrated, the LSB has further enforcement powers available and will not hesitate to consider whether additional intervention is necessary to protect consumers and the public.
What enforcement powers does the LSB have?
The Legal Services Act 2007 gives the LSB a range of powers where a regulator’s action or failure to act has, or is likely to, adversely impact on one or more of the regulatory objectives:
- Section 31: performance targets and monitoring, to require and measure improvement in specific areas. These are the powers exercised by the LSB in March 2026 against the SRA in relation to SSB Law.
- Section 32: directions, to require a regulator to take specified action. These are the powers exercised by the LSB in May 2025 against the SRA in relation to Axiom Ince.
- Section 35: public censure, to make serious regulatory failures public. These are the powers exercised by the LSB in March 2026 against the SRA in relation to SSB Law.
- Section 37: financial penalties, in circumstances set out in the Act, including some failures to comply with LSB requirements.
- Section 41: intervention directions, an exceptional power only used in serious circumstances that allows the LSB or a person nominated by it to take over a regulator’s regulatory functions, where lesser measures are not adequate.
- Section 45: cancellation of designation, an exceptional measure available at the most serious end of the LSB’s enforcement framework.