Oversight regulator raises concerns over firm collapses and orders audit of SRA’s compliance with statutory directions
The Legal Services Board (LSB) has ordered the Solicitors Regulation Authority (SRA) to take “urgent and immediate” regulatory action after raising concerns over law firm collapses linked to losses of around £100m in client money.
The oversight regulator discussed the SRA’s regulatory performance this week, with just one month remaining before the deadline for the SRA to comply with statutory directions imposed following the collapse of Axiom Ince Limited.
The LSB said it has asked the SRA to commission an independent external audit to “assess and evaluate” the regulator’s compliance with those directions. The audit report is expected to be submitted to the LSB by the end of June.
The watchdog also raised fresh concerns over the collapse of PM Law Limited. According to the LSB, the cumulative loss of client money linked to Axiom Ince and PM Law now stands at approximately £100m.
In a statement, the LSB said: “The LSB is deeply concerned about the failure of PM Law Limited.” It noted that the SRA has separately commissioned an independent review into its handling of PM Law, with findings expected in the coming weeks.
Alongside concerns linked to those cases, the LSB warned about “the likelihood of further significant failures in this class of case” and said urgent action was required to protect consumers.
The oversight regulator confirmed it would increase scrutiny and oversight of the SRA’s handling of higher-risk firms. It said it would exercise formal information-gathering powers under section 55 of the Legal Services Act 2007 to obtain further details on how the SRA plans to manage high-risk firms, mitigate risks and protect consumers exposed to harm.
The statement added: “The LSB will exercise its formal information-gathering powers under section 55 of the Legal Services Act 2007 to obtain further information from the SRA on how it will handle and manage higher-risk firms, how it will mitigate the risks, and, crucially, how it will protect consumers at known risk of harm.”
The LSB also highlighted the scale of current regulatory intervention facing the SRA. “The SRA is under three concurrent statutory enforcement measures, which is exceptional in the history of legal services regulation,” it said.
Those measures include statutory directions issued in May 2025 following the independent review into the Axiom Ince collapse, with a compliance deadline of 28 May 2026; a performance target imposed in March 2026 linked to failures in the SSB Group case; and a public censure, also issued in March 2026, relating to the SSB Group matter.
The LSB Board has further requested that the SRA Board attend an in-person meeting before the end of May to provide assurance that it has “the necessary expertise and oversight approach to deliver the urgent reform needed to address the challenges and complexities in the sector”.
Monisha Shah, chair of the LSB, said: “The LSB’s primary concern is consumers: those who have already suffered harm and those who remain at risk. People must be able to use legal services with confidence that effective regulation is in place to protect them, particularly from loss arising from alleged criminal activity.”
Separately, the LSB said it is “closely scrutinising” the SRA’s response to the collapse of PM Law Ltd, including “what the SRA knew, when it knew it, and what action it took”.
The oversight regulator said it does not expect to comment further until discussions with the SRA conclude and the matter is reconsidered at the LSB Board meeting on 21 July 2026.