Axiom Ince: Cost of default going up
The collapse of Axiom Ince is now set to cost the solicitors’ profession £41m in payouts from the SRA Compensation Fund, it has emerged.
More than £17m was paid out in the year to 31 October 2024, according to the fund’s newly published accounts for that period, but it expects more than twice that amount to be the final figure.
The Solicitors Regulation Authority (SRA) had previously put the estimated final figure at £35m.
In total, around £60m went missing from Axiom Ince and five men have been charged with various offences by the Serious Fraud Office.
The fund is a discretionary fund of last resort that can pay out up to £2m where a solicitor has stolen or not accounted for client money – and it is not covered by the firm’s professional indemnity insurance – or did not have insurance in place.
The majority of grants arise from claims made following an SRA intervention.
The surge in applications because of Axiom Ince, on the back of the major interventions into Kingly and Metamorph Law, was why the SRA had to dramatically increase contributions to the fund for the current financial year – £90 per solicitor and £2,220 per law firm, up from £30 and £660 respectively.
The SRA has proposed reducing contributions for 2025/26 to £70 for solicitors and £1,950 for firms.
The regulator recovers grants where it can, primarily from the client accounts of shut-down firms, which it holds on trust for clients – totalling £73m as at 31 October – but also from the owners of those firms personally.
The fund received or reopened 2,859 claims in the year (2022/23: 2,739) and closed 2,718 (2,140). At the end of the year there were 1,079 open claims (938) with a total claim amount of £52m (£60m).
The fund paid £28m in grants in 2023/24 – £17m of which down went to Axiom Ince clients – but this was down from a record £41m in 2022/23. That had been due to claims arising from the Metamorph Group interventions.
The SRA spent nearly £12m on interventions in the year, which it recharges to the fund, but this was down from more than £20m in 2022/23, which was elevated by the Axiom Ince intervention.
Other costs of £4m – including indexing, archiving and storing the files of the firms shut down – are also recovered from the fund.
The accounts said the fund has sufficient reserves to meet the likely demands on it.
The SRA is considering changes to the fund as part of its consumer protection review but recently decided against an interim measure to change the 50/50 split between solicitors and firms in the value of their contributions to 70/30.
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