The Solicitors Regulation Authority missed an opportunity to identify alleged misappropriation of funds from the client account a year before it took action against Axiom Ince, the independent review reveals today. 

According to the Carson McDowell report, the SRA carried out an investigation into Axiom, which had acquired around six firms since its foundation in 2008, in October 2022. The firm had self-reported concerns about a former employee, 'X', who had resigned in June 2022. Issues of concern included the payment of monies by clients directly to X. 

As part of its investigation, the SRA requested documents including a list of bank accounts, the firm's last accountant's report and the last set of practice accounts. The investigation revealed that X had taken payments into their own bank account for work ostensibly by the firm. 

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The 75-page report continues: 'Whilst the primary purpose of the October 2022 investigation was to scrutinise X's conduct, the checks in respect of the firm's accounts should have been more thorough. The standard investigation process was not followed in respect of obtaining bank statements and correspondence from the bank holding client moneies.'

At the time, the SRA's procedure did not require forensic investigation officers to contact the bank directly to verify client account balances. Rather 'The SRA placed its trust in law firms to provide [investigators] with bank statements and a confirmatory letter from the firm's bank.'

It sums up: 'It is clear that the investigation in October 2022 was an opportunity missed.'

The SRA intervened into the firm of Axiom Ince on 3 October 2023. 

The Carson McDowellreview recommends that financial investigation officers 'be reminded of the importance of carrying out checks on the ciient account thoroughly even when they are investigating a matter not related to client monies'. 

 

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