The details of the Legal Services Board’s independent review of the Solicitor Regulation Authority’s handling of the Axiom Ince collapse will now be familiar to the profession due to widespread media coverage.
All too often with regulatory inquiries, a review is conducted and published, but it does not lead to real or lasting change. This must not be allowed to be the case here.
We welcome the LSB-commissioned independent review because it is meticulous, forensic, detailed and dispassionate about the SRA’s inadequate and ineffective handling of Axiom. The solicitors’ regulator must consider the findings of the report seriously and act quickly on the recommendations to avoid confidence in the regulation of the legal profession being dented any further.
As the representative body for the profession, we are deeply concerned about the contents of this report and are here to speak up for our members, who have already noticed changes in how the SRA operates.
Our members have seen the SRA shift its focus by seeking to expand its role by increasing its fining powers and undermining the role and authority of the Solicitors Disciplinary Tribunal without clear rationale.
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Additionally, the ongoing question of the regulation of legal executives moving from the Chartered Institute of Legal Executives (CILEX) to the SRA is also taking up unnecessary bandwidth and is a distraction from the SRA’s core responsibilities.
The LSB’s independent report found that the whole collapse of Axiom and the harm to clients was potentially avoidable from the outset. Opportunities to step in sooner and limit the misuse of client funds and minimise the number of victims were missed. The cost to the profession in making up the now huge shortfall in the Compensation Fund could have been reduced.
The Axiom report should be a wake-up call to the solicitors’ regulator to focus on its core role to serve the public interest and protect consumers from rogue individuals.
Solicitors are rightly angry at the findings, and the SRA must be accountable and implement the recommendations made in the LSB’s independent review and ensure that lessons are learned.
What’s next?
The LSB has said it will initiate an enforcement process to set directions that requires the SRA to make changes to better achieve the regulatory objectives and this process must take its proper course.
If this regulatory action is to have effective lasting impact, then the SRA needs to accept its failings and the necessity for it to change.
Yet surprisingly, the SRA has said in its response to the independent review that there is a lot in the report it does not agree with, including the key conclusions, and that it does not understand the basis for the decision to move to enforcement action. It seems to assert that it is already doing what it needs to do.
The LSB’s report into Axiom is just one deep-dive into how the SRA exercises its functions. The LSB has yet to publish its independent review of the SRA’s regulatory actions in the lead-up to the collapse of SSB Group.
We, and the profession, are waiting on this report with huge interest. The SRA has the opportunity now, before that review concludes, to demonstrate its commitment to change and address the weaknesses that led to the circumstances around the Axiom collapse. The SRA must return its focus to its core role if it is to restore the public’s full confidence in the solicitor profession and its own ability to regulate effectively.
Richard Atkinson is president of the Law Society of England and Wales
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