SRA: Additional directions to be imposed
The Legal Services Board (LSB) is to step up its demands of reform at the Solicitors Regulation Authority (SRA) in the wake of the review that exposed major failures in its supervision of PM Law.
The oversight regulator also expressed disappointment at the “standard of leadership and accountability demonstrated” by the SRA board.
As we reported yesterday, the independent review commissioned by the SRA – at the LSB’s prompting – showed that it had opportunities to take action on the PM Law Group long before it collapsed, but that structural issues meant it did not bring together the information it held across the organisation to understand the scale of the problem at the Sheffield-headquartered group.
The SRA is currently under an unprecedented three statutory enforcement measures imposed by the LSB – statutory directions to address the failures over Axiom Ince, and both a public censure and performance targets given the failures over SSB Law.
Alongside the PM Law report, the SRA also published a report by the Berkeley Partnership that assesses the progress it has made in achieving the directions, which were issued in May 2025 and required a 12-month review.
The directions require the SRA to make improvements across governance, risk and supervision (encompassing authorisation, client money, mergers and acquisitions, and pre-intervention procedures).
The SRA’s action plan sets out 60 separate steps to achieve these and the report found that 48 (80%) have been fully met and five partially met, while seven were future actions that either fall due or depend on external approval after the initial 12 months. No step had not been met.
Across the directions, the SRA has established “significantly enhanced governance frameworks, risk architecture, and supervisory processes”.
It went on: “However, the review identifies a consistent and material qualification: while processes, frameworks and controls are largely in place, their effectiveness in practice is not yet fully evidenced.
“In particular, limitations remain in demonstrating how improvements translate into better outcomes, including earlier risk identification, more proactive intervention, and consistent use of intelligence to inform regulatory decisions.”
The review also recommended that the SRA establish a “defined workstream, plan and timeline to address the question of whether firms should hold client money at all”.
Relatedly, it should investigate the wider use of third-party managed accounts, “including whether they could be incentivised or required for higher-risk firms”.
The Berkeley Partnership noted that the PM Law review gave “firm-specific examples of the effectiveness gaps our review identifies – reinforcing our conclusion that the next phase must focus on embedding, evidencing and sustaining these reforms”.
The SRA said the urgency of the changes that the report showed still needed to be made had been “sharpened” by the PM Law review. “This is a fundamental part of the organisation’s wider transformation programme,” it said.
In response to both reports, the LSB said it has decided to initiate further enforcement action to secure “urgent improvements” at the SRA, given that the cumulative loss of client money from Axiom Ince and PM Law was around £100m.
A statement said: “Having reviewed the available evidence, the LSB has concluded that there is not sufficient evidence to demonstrate that the changes introduced by the SRA are consistently delivering improved outcomes for the public and consumers.
“Significant performance challenges remain in areas including pace of regulatory action, organisational focus, specialist capability, systems and governance.”
As a result, it is to maintain the directions and performance targets already in place, and set additional targets “to enable more rigorous assessment of the SRA’s progress and to intensify regulatory oversight”.
It will also require more frequent independent assurance to show “not only that reforms are being implemented, but that they are delivering the outcomes required”.
The LSB has separately approved the SRA’s 2026-27 practising fee application, which will see a sharp rise in what solicitors and firms pay to cover the extra £25m needed to fund these reforms.
The LSB said the new directions would require the SRA to demonstrate what difference the additional funding was making for consumers and that it is being used efficiently and cost-effectively.
Delivering these changes did not rest solely with the SRA’s executive team – its board had to provide “visible leadership and effective challenge”, something the LSB indicated has not happened to date.
“The LSB is disappointed by the standard of leadership and accountability demonstrated by the SRA board in response to the serious regulatory failures that have repeatedly occurred, at significant cost to consumers and to public confidence in the SRA.
“Under the Legal Services Act 2007, the LSB does not have powers to determine the membership of the SRA board.”
This would appear a criticism in particular of board chair Anna Bradley, whose elongated term concludes at the end of 2006, during which time she has also overseen the SSB Group failure but has consistently refused to resign.
The LSB warned: “If sufficient progress is not demonstrated, the LSB has further enforcement powers available and will not hesitate to consider whether additional intervention is necessary to protect consumers and the public.”
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