Axiom Ince review to investigate regulation of ‘accumulator firms’

Viall: Rapid review

The Legal Services Board (LSB) review of the collapse of Axiom Ince will include not just the role of the Solicitors Regulation Authority (SRA) but also its approach law firm consolidators.

LSB general counsel Danielle Viall, leading the oversight regulator’s work on Axiom Ince with the help of Northern Irish law firm Carson McDowell, told the SRA it would have to release all the documents involved and senior executives and board members could be interviewed.

Matthew Hill, the LSB’s chief executive, announced last month that it was planning an “independent, objective review of the events leading up to the SRA’s intervention into Axiom Ince” – the oversight regulator has rejected a demand that the review be independent of the LSB as well.

Setting out the terms of reference in a letter this week to SRA chief executive Paul Philip, Ms Viall said the “primary aim of the review” was to “provide assurance to the board in the interests of public and professional confidence and to identify any learning based on independent and objective assessment of the facts”.

However, information gathered as part of the review “may also result in consideration of the exercise of the LSB’s enforcement powers”.

The review would “focus on the effectiveness with which the SRA discharged its regulatory functions in respect of Axiom Ince” in accordance with its duties under the Legal Services Act.

It aimed to establish the “adequacy, efficiency and effectiveness” of the regulator’s actions”, what “further actions the SRA could or should have taken (if any)” and what “changes are required (if any) to SRA policies and/or procedures to mitigate the possibility of a similar situation arising again”.

The review would consider “the events leading up to the SRA intervention into Axiom Ince, including any steps or actions taken (or not) by the SRA in the period before”.

It would examine the “adequacy of the SRA’s relevant rules and policies with regard to the supervision of Axiom Ince, and the extent to which they were implemented”, and the adequacy of the SRA’s supervision of compliance with them.

Ms Viall said the review would also include “the SRA’s policies and procedures in relation to ‘accumulator firms’ [the term it uses for consolidators], the manner in which the SRA assesses firms and transactions to determine whether they are high risk, and the extent of oversight which the SRA has over higher risk firms and transactions”.

SRA chair Anna Bradley said last month that it had already started a programme of inspections of accumulator firms and would be carrying out “a more in-depth thematic review” early this year.

Ms Viall said the LSB would require a copy of “all documents held by the SRA” relating to Axiom Ince, while Carson McDowell may conduct interviews with SRA board members and/or members of the executive.

Ms Viall said the LSB anticipated “a rapid review with the report published in spring 2024”.

She added that the LSB would be making no more “substantive public comment until the review has concluded and findings are published” and asked the SRA to adopt the same approach.

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