SRA faces backlash over Axiom Ince collapse
updated on 11 November 2024
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The Solicitors Regulation Authority (SRA) has been criticised for its response to the collapse of Axiom Ince in 2023, which led to the loss of 1,400 jobs.
Axiom Ince stopped trading in October 2023 and investigators discovered that £64 million worth of client money was missing – a loss that’ll be covered by the profession through a 270% rise in contributions to the compensation fund.
The Legal Services Board (LSB) commissioned a report by Carson McDowell LLP, a Northern firm not regulated by the SRA. The findings revealed that the SRA didn’t act “adequately, effectively and efficiently” and didn’t take “all the steps it could or should have taken”. Therefore, the report suggested that the regulator’s actions “necessitate change in its procedures to mitigate the possibility of a similar situation arising again”.
Following the report, the LSB said it’ll initiate actions under the Legal Services Act, which allows the LSB to act in the event of a regulator's failure to comply with the act. This will be the first time the LSB will use these powers since the creation of the act in 2007.
Alan Kershaw, LSB chair, said: “The SRA’s actions and omissions have in our view adversely impacted on confidence and trust in the regulation of legal services.”
In a statement responding to the announcement, SRA Chief Executive Paul Philip said: “At the heart of this issue is a suspected complex and well-hidden fraud carried out by a solicitor, with an ongoing criminal investigation by the serious fraud office. The report recognises our ‘excellent work’ in uncovering the suspected fraud. But there are things we could have done better. We moved quickly last year to tighten up some of our processes.
“There is a lot in the report that we don’t agree with, and we don’t understand the basis for enforcement action. However, we think it is important to focus on working with the LSB and others to tackle future challenges in the legal sector.”
Devonshires partner Philip Barden, who acts for the remaining Axiom directors and the administrators, also commented: “Action is being taken to recover as much of the £64 million losses as possible and we are hopeful of a significant recovery although the process is complex and may take some time to achieve.”
