The Carson McDowell review into the regulatory events leading up to the Solicitors Regulation Authority’s intervention into Axiom Ince culminates with four pages of recommendations. They cover:

The regulation of solicitors’ accounts

The SRA should revise its inspection regime for firms. 'The current SRA approach to solicitor accounts is reactive and does not reflect a proactive approach.' While the review recommends a risk-based approach, any reform 'should ensure that no firm can practise for many years without ever being visited or contacted by the SRA.'

Following the 'missed opportunity' in October 2022, investigators 'should be reminded of the risk of holding client monies and the importance of carrying out checks on the client account thoroughly even when they are investigating a matter not related to client monies.'

The SRA should require all regulated firms to provide it with a copy of their annual accountant's report, not just where the report is qualified, as applies today. 

The report notes that Axiom retained the same firm of accountants from its foundation in 2008 to its demise 15 years later. 'Consideration should be given to whether it is appropriate to require firms to engage new accountants to prepare their accountant's report periodically, for example every three years.'

Approach to accumulator firms

'We recommend that the SRA continues to collate information regarding accumulator firms, and that it continues to carry out proactive inspections where it appears that there is a risk to consumers.'

On the sale/acquisition of firms, the review recommends that the SRA should examine whether its current approach strikes the right balance. While the SRA does not at present have the power to block acquisitions, it could seek these powers by application to the LSB. 'We consider that it would be appropriate for the SRA to have a process to triage acquisitions, and to scrutinise those which appear to pose the greatest potential risk to consumers and the public interest.'

Approach to interventions

The review detects what it calls a 'chill effect' within the SRA when it comes to the prospect of intervening into a practices as large as Axiom Ince. Given the prospect of more consolidation in the market 'it is important that the potential of intervention into a large firm is one that is viewed without trepidation by the SRA'. 

The SRA should have a defined and recorded structure for decision-makinng on interventions and provide clear guidance to firms that are the subject of an intervention to assist them with the operation of the business and to ensure the protection of the client account.

 

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