SRA told to tighten governance, boost financial checks and intelligence sharing by 2026
The Solicitors Regulation Authority (SRA) has been handed a strict timeline to fix its regulatory failings following the high-profile collapse of Axiom Ince, with the Legal Services Board (LSB) demanding sweeping changes before the end of next year.
The oversight regulator has instructed the SRA to embed new governance structures, improve scrutiny of mergers, and monitor firms’ finances more closely, after its earlier report slammed the SRA’s handling of the Axiom Ince debacle.
Much of the overhaul must be completed by December 2025, including regular risk reporting to the SRA’s audit and risk committee and the introduction of improved internal oversight mechanisms. Training updates reflecting lessons learned from the Axiom Ince collapse have a slightly longer deadline — to be completed by April 2026.
The SRA must also develop systems to proactively collect and analyse market intelligence, especially when risks emerge during law firm sales or acquisitions — key areas where failures enabled Axiom Ince’s misconduct to grow unchecked.
A central part of the reform is a new risk assessment approach that evaluates the potential for consumer or market harm based on law firms’ financial stability. This will require the SRA to obtain and review financial and accounting data from regulated firms — a process the LSB expects to be in place by July 2026, though extensions may be granted.
Embed from Getty ImagesThe push comes after the LSB sanctioned the SRA earlier this year for its mishandling of the Axiom Ince affair, which saw the firm collapse amidst reports of missing client money, unchecked expansion, and weak regulatory oversight.
The LSB acknowledged that the SRA had already made progress since the release of its independent review, stating in May that the regulator had drawn up a “robust plan” and taken initial steps toward reform. But the LSB made clear that implementation is now non-negotiable, and the SRA must show evidence of substantial improvements.
This reform drive will be the first major test for incoming SRA chief executive Sarah Rapson, who is expected to take over later this year. Rapson will inherit a regulator under pressure, with trust shaken and the legal profession demanding reassurance that Axiom Ince was a one-off, not a systemic failure.
Complicating matters further, the LSB is still reviewing how the SRA handled the shutdown of SSB Law, a Sheffield firm that also ran into trouble. The outcome of that report could add more demands or modify the current timeline.
In the wake of Axiom Ince’s collapse — where millions in client funds vanished and several firms were entangled in its acquisition spree — the legal community has criticised the SRA for being too reactive, and failing to spot red flags despite multiple opportunities.
As the SRA now races to comply with the deadlines, attention will turn to whether its internal culture, governance, and intelligence capabilities can be transformed in time — or whether more oversight action from the LSB will be needed.
