SRA to tighten grip on law firms following client protection failures
The Solicitors Regulation Authority (SRA) has announced plans to consult on expanding its powers to examine law firms more closely, following heavy criticism of its oversight in the collapse of SSB Law.
Under the proposed approach, the regulator would seek greater access to internal information about firms’ business models, including the types of work they undertake, their reliance on particular practice areas, and their financial relationships with litigation funders. It also intends to increase direct engagement with firm managers rather than relying solely on compliance officers, to gain a clearer picture of what happens within firms on a day-to-day basis.
The proposals come in the wake of a damning report from the Legal Services Board (LSB), which found that the SRA had failed to protect clients of SSB Law. Thousands of clients had been signed up to pursue cavity wall insulation claims on a no win, no fee basis, only to face demands for costs after the firm’s collapse.
The LSB report concluded that the SRA had not acted effectively despite receiving more than 100 reports about SSB’s conduct. It accused the regulator of systemic shortcomings in its risk assessment and supervision processes.
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In response, the SRA said it accepted the findings but argued that the episode exposed the limitations of its current powers and the need to collect more data across the sector.
Speaking at the SRA’s annual compliance conference this week, chief executive Paul Philip, who retires next week — said the regulator must now decide whether it needs to become “more intrusive” and adapt its approach to supervision.
“One of the decisions of the SRA is we don’t know enough about law firms, the work they practise in or certain metrics,” he told delegates. “In order to identify more risks and patterns, we need more data. Perhaps we will be asking better questions and demanding better information from those firms.”
Philip acknowledged concerns that the shift could make regulation more burdensome but said the intention was not to increase red tape unnecessarily. The focus, he explained, would be on firms and areas considered high-risk. These include conveyancing, immigration and consumer claims, sectors historically associated with compliance and client care issues.
“We need to do something proactive, which is more inspections to deal with these risks before they happen,” Philip said. He described the forthcoming regulatory response as “much more penetrative” and focused on early intervention.
The SRA’s plans mark a potentially significant shift in its philosophy. For more than a decade, the regulator has emphasised outcomes-focused regulation and targeted enforcement rather than ongoing supervision. The SSB case has reignited debate about whether that approach provides sufficient protection for clients, particularly in high-volume consumer practices.
The regulator’s chair, Anna Bradley, told the same conference that rebuilding public trust would depend on stronger oversight and transparency. The SRA intends to launch a public consultation on its proposed reforms in early 2026, once Philip’s successor is appointed.
However, the response to the SRA’s announcement has not been universally supportive. The barrister who first raised concerns about SSB Law, referred to anonymously in the LSB’s report — criticised the suggestion that data collection was the underlying problem.
“The regulator had abundant data, repeated intelligence and multiple red flags,” she told the Law Gazette. “What failed was not information — it was leadership.”
Her remarks reflect a broader concern within the profession that the SRA’s difficulties stem not from a lack of data but from failures in decision-making and enforcement. Critics argue that greater powers will be meaningless unless accompanied by a cultural change within the regulator itself.
The SRA has not yet set out the full details of how its proposed “intrusive” measures would operate, but it is expected to outline potential new reporting requirements and inspection powers during the consultation. The regulator maintains that its goal is to identify risks earlier and act more decisively