'LSB must insist the SRA puts its house in order': Law Society statement in full

An independent review of the Solicitors Regulation Authority’s handling of the Axiom Ince fallout, commissioned by the Legal Services Board (LSB), reveals a catalogue of errors and missed opportunities on the part of the SRA.

By the time that the SRA finally acted, around £64 million had been taken from Axiom’s client accounts. In the wake of the SRA’s regulatory handling of these events, the LSB commissioned an independent law firm, Carson McDowell, outside of the jurisdiction of England and Wales to review the SRA’s actions. The review found that:

• The SRA did not act adequately, effectively and efficiently,
• The SRA did not take all the steps it could or should have taken, and
• The SRA’s actions and omissions in this matter necessitate change in its procedures to mitigate the possibility of a similar situation arising again.

Richard Atkinson, Law Society president, commented: 'The independent review paints a vivid picture of the SRA’s inadequate and ineffective handling of Axiom.

'As a result of the SRA’s failure to take all the steps it could or should have taken, Axiom was able to act without intervention, leading to money going missing and huge distress to their clients. Ultimately, it has fallen to the profession as a whole – solicitors and law firms – to shoulder the cost through a substantial increase in contributions to the Compensation Fund, which is a vital protection for clients and consumers.

'While the events leading to Axiom’s collapse were happening, the SRA was focused on increasing its fining powers and proposing regulatory expansion rather than tackling the known risks from accumulator style firms and ensuring its operations were joined up and laser focused on protecting consumers. The report makes it clear the SRA had the funding, staff and powers to take the necessary action to prevent the alleged wrongdoing.

'The problems identified in the report can be fixed, but the LSB must insist that the SRA puts its house in order and that the SRA’s management and governance concentrates on its core responsibilities.

'As part of the SRA’s consumer protection review we have identified areas where the SRA can make improvements, which will help reduce risk and provide clients and consumers with better protections in the event of things going wrong in a regulated firm. We hope to see the SRA acting quickly on these recommendations.

'The public and solicitors benefit hugely from a well-regulated legal profession. It is the foundation of the legal sector’s success nationally and internationally and it is a vital consumer protection.'