Firms would have to notify the SRA of planned mergers and acquisitions, and when they start holding client money
The Solicitors Regulation Authority (SRA) has launched a consultation on proposed new notification requirements for law firms, designed to help identify risks earlier and strengthen protections for client money. Announced on 19 June 2026, the consultation forms part of the regulator’s wider programme of reforms aimed at reducing the likelihood of consumer harm and improving oversight of emerging risks in the legal services market.
Under the proposals, firms would be required to notify the SRA of certain prescribed events that could indicate a change in their risk profile, including when they begin holding or receiving client money or when they merge with or acquire another legal practice.
Aileen Armstrong, executive director of strategy and policy at the SRA, said: “Our focus is on gaining earlier visibility of potential risk. Having the right information at the right time is important to help us to proactively identify risks earlier and, if necessary, act on them to prevent harm, including the loss of client money.
“The proposed new notification requirements will help set the foundation for this. We are initially targeting two areas where stakeholders agree there should be greater visibility of changes in real time: law firms acquiring other firms and firms starting to hold client money. We urge stakeholders to engage with us on our proposals for achieving this.”
The consultation follows reforms announced earlier in June requiring all firms holding client money to submit accountants’ reports to the SRA. Those reforms were announced alongside new rules preventing individuals who can make significant decisions about how a firm is run from also acting as Compliance Officers for Legal Practice (COLPs) or Compliance Officers for Finance and Administration (COFAs).
Recent high-profile cases, including PM Law and Axiom Ince, have reinforced the importance of identifying emerging patterns in merger and acquisition activity across the market and gaining earlier visibility of developments within firms that might present risks, the regulator said.
According to the SRA, the proposals form part of a wider programme of work moving towards a more intelligence-led model, involving proactive risk identification and a focus on the big issues for 2026 and beyond.
The consultation also sits alongside wider work outlined in the SRA’s draft 2026/27 business plan, including consideration of whether the current model for firms holding client money provides sufficient long-term protection and whether senior individuals should have clearer personal responsibility for protecting client money and managing risks.
The consultation is open until 17 August 2026.