The oversight regulator has today expressed ‘serious concerns’ about the Solicitors Regulation Authority's effectiveness, following the Axiom Ince and SSB debacles.
In its latest regulatory performance assessment, the Legal Services Board categorised the SRA's operational delivery as ‘insufficient’ for authorisation, supervision and enforcement. Serious concerns are also raised about communication and accountability with regard to the relationship between senior executives and the SRA board.
Today's report reflects on the LSB-commissioned review last year into the SRA’s actions leading up to the regulator's intervention into the firm Axiom Ince. This review’s conclusions, which were disputed by the SRA, stated there had been a failure to put in place proper mechanisms to supervise firms that pose a higher risk to consumers, and a failure to protect client funds.
In a significant departure from previous assessments, when the LSB largely gave the SRA a clean bill of health, there are also further concerns about other areas of operational performance. In particular, the LSB report cites the SRA’s failure to publish pass-rate data for SQE training providers and the affordability, design and quality of the exam itself.
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The LSB added: ‘The SRA’s failure to publish provider pass-rate data, despite it making a commitment to do so, means that SQE candidates do not have all the information they need to make informed choices. We expect the SRA to remedy this situation as soon as possible and by no later than autumn of 2025.’
The SRA board’s oversight of the executive is a significant area of concern, while the organisation also needs to do more to assess the impact of its regulatory arrangements and activities. The assessment adds: ‘We are also concerned that the SRA’s executive has not consistently provided its board with timely or sufficient information on significant cases and emerging risks.
‘Significant consumer detriment arising from the collapse of [Sheffield claims firm] SSB Group Limited, raising serious questions about the conduct of the solicitors and firms involved, all regulated by the SRA, contributes to our concerns here.’
In the case of Axiom Ince, though the incident was described by the SRA as a serious event, 'the SRA board was not formally informed of the (first) intervention into directors of Axiom and the significant client fund shortfall – excluding the specific amount – until some weeks after the intervention. This delay raises concerns about the board’s ability to effectively hold its executive to account and the adequacy of executive reporting on critical matters giving rise to risks to consumers and the public – and, in this case, significant impact on the SRA Compensation Fund.'
The SRA is applauded for using new methods to increase engagements with the public and for its pre-consultation exercise as part of its consumer protection review. But the LSB says it ‘cannot at this stage take sufficient assurance that the SRA’s approach ensures public confidence in its performance’.
The SRA is not the only regulator on the end of criticism: the Bar Standards Board is also found to be failing across a range of measures. The LSB said the bar regulator is taking too long to authorise people and providers and is failing to improve efficiency and effectiveness quickly enough.
The LSB is also concerned about whether the BSB is adequately holding senior leaders accountable for delivering improvements.
Craig Westwood, chief executive of the LSB, said: ‘This year’s assessment reveals some concerning shortfalls in regulatory performance, particularly from the two largest regulators. Effective regulation is essential to protecting the public and maintaining confidence in legal services. All regulators must address the issues that we’ve highlighted and must demonstrate more clearly how their activities benefit consumers.’
SRA chief executive Paul Philip recently announced he intends to retire later this year. An SRA spokesperson said: 'We will be discussing with our board and agreeing an action plan.'
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