Plans include practising certificate fees rising from £190 to £240 and compensation fund contributions from £70 to £120
The Solicitors Regulation Authority (SRA) has unveiled plans for a sharp increase in its 2026/27 budget, proposing an overall funding requirement increase of £25m, or 29%, to £111.5m as it seeks to fix its foundations, strengthen its operations, build new capabilities and rebuild trust following recent regulatory failures and mounting pressure on the compensation fund.
Under proposals published for consultation, the regulator’s call on practising certificate fees for individual solicitors would rise from £190 to £240. Around 40% of the SRA’s funding requirement would come from individual fees, with the remaining 60% paid by firms based on turnover.
The plans also include a substantial increase in contributions to the SRA Compensation Fund, which exists to protect consumers when regulated firms collapse or money goes missing. The SRA said recent months had placed “significant pressure” on the fund following the closure of PM Law Group, increased intervention activity and rising associated costs.
As a result, proposed compensation fund contributions for 2026/27 would rise from £70 to £120 for individual solicitors and from £1,950 to £3,600 for SRA-regulated firms. The regulator said claims linked to the collapse of PM Law had already exceeded £20m by April 2026, with further claims expected.
The proposed compensation fund requirement of £46.3m marks a steep increase from £26m in 2025/26 and surpasses the previous high of £31.6m in 2024/25, the year in which thousands of claims were made following the collapse of Axiom Ince.
In its draft business plan, the SRA said the organisation faced growing operational and financial pressures as the legal market became increasingly complex and technologically advanced. Chief executive Sarah Rapson said the regulator’s “approach, capabilities and resources have not kept pace as the market it regulates has evolved”.
She said: “Moving forward, the SRA must focus on fewer priorities, move from a largely reactive to a proactive approach to regulation, and improve operational and technological capabilities to be better prepared for the scale and complexity of the challenges we face. It must focus more on the biggest risks impacting consumers and be more alert to issues on the horizon.”
Ms Rapson said the regulator had reached a point where “a reset is required”, adding that the business plan set out “a necessary transformation to fix its foundations, strengthen its operations and build new capabilities that will put the SRA in a stronger position for the future”.
The regulator said misconduct reports had risen sharply in recent years, with the number of reports assessed increasing by 45% in the three years to October 2025 to 16,499. The SRA said the growing caseload had affected investigation times and its ability to meet expectations from both consumers and the profession.
The draft plan identifies three central priorities for the coming year: achieving operational excellence, developing the ability to identify and address risks proactively, and focusing regulatory resources on the “biggest issues”.
The SRA said it wanted to move away from a “largely reactive, enforcement-led model” towards earlier engagement and intervention before consumer harm occurs. This would include greater use of data, intelligence and supervision, particularly in areas seen as higher risk, including firms carrying out high-volume consumer claims work and firms with complex business structures.
The regulator also signalled that controversial reforms to client accounts remain under consideration, including the possibility of moving away from the traditional client account model altogether.
At the same time, the SRA acknowledged that some workstreams would be paused so resources could be concentrated on core regulatory priorities. These include further work on transparency rules, quality indicators and digital comparison tools. The regulator also confirmed it would not pursue further work relating to the potential redelegation of the regulation of CILEX professionals.
Ms Rapson said the proposed investment would require “bold and sometimes difficult choices” and acknowledged the pressure the increases would place on the profession. However, she argued that investment now was necessary to avoid greater risks and costs in the future.
“This plan represents a conscious decision to invest in the organisation now, rather than accept the higher risks and costs that would ultimately arise from continuing as normal,” she said. “By investing now to fix and strengthen the SRA’s foundations, and by being transparent about the changes being made, we will create the conditions for sustainable improvement.”
Law Society of England and Wales President Mark Evans describing the scale of the increases as “deeply concerning”.
Law Society president Mark Evans said: ‘We support the principle of the compensation fund which is a vital protection for consumers and clients. Several failures, including most recently PM Law, have placed considerable strain on the resources of the compensation fund and we recognise the need to rebuild the fund’s reserves.
‘The new CEO of the SRA, Sarah Rapson, has inherited a problematic legacy and we welcome her openness and commitment to address those problems. We do not doubt that this will require money and resource.
‘But we cannot forget that it is the hard-working front line of the profession that bears the cost of fixing an organisation, which had lost focus on its core role as demonstrated by its failures over the Axiom Ince and SSB collapses.
‘Therefore, any increase in costs to the profession and certainly any increase approaching anything like the scale now being proposed must come with a credible and transparent plan from the SRA to deliver measurable and long-lasting improvements. Engagement with the profession is essential to reassure our members that the regulator is taking steps to actively avoid a repeat of past failings.’
The consultation on the draft business plan and funding proposals has now opened, with the SRA warning that practising costs may continue rising beyond 2026/27 as it develops a new three-year corporate strategy and seeks to rebuild financial reserves over the longer term.