SRA seeks extra £25m from profession “to fix the foundations”

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Rapson: Sustainable improvement

The Solicitors Regulation Authority (SRA) today set out the initial cost of fixing its problems – a 29%, or £25m, increase in its funding for the 2026-27 practising year.

This translates to the SRA’s portion of the practising certificate fee going from £190 to £240.

Individual solicitors contribute 40% of practising fees, with the rest charged to law firms according to their turnover.

The draft business plan issued for consultation today said there will also be huge increases in contributions to the SRA’s Compensation Fund – with clients of PM Law the latest to put it under strain after Axiom Ince. They have made £20m worth of claims on the fund to date.

The SRA is undertaking more interventions as well – the costs of which are recovered from the fund – with 35 in less than six months of the current practising year, compared to 42 in the whole of 2024-25.

Individual contributions will jump 71%, from £70 to £120, with firm contributions up 85% from £1,950 to £3,600.

The SRA is also seeking views on whether to change the current 50/50 split between individuals and firms so that 70% of the compensation fund requirement will be paid by individuals this year.

It only decided last year not to do so but is revisiting the idea given the size of the increase.

Longer term, the SRA will also look at whether firms should continue to pay a flat fee regardless of size.

Overall, these changes mean a 38% increase for individuals in the cost of practising, from £260 to £360.

The figures do not include the portion of practising fees that go to the Law Society in its representative guise, or the costs of other bodies the profession has to cover: the Legal Services Board, Legal Ombudsman, Solicitors Disciplinary Tribunal and Office for Professional Body Anti-Money Laundering Supervision.

The Law Society is proposing a 2% increase in its portion of the practising certificate, amounting to an extra £1-2, using its reserves to cover what would have been a bigger rise.

The SRA will raise a total of £112m in practising fees in 2026-27, compared to £87m for the current year.

Its overall proposed budget is £195m, with £59m coming from income from the Solicitors Qualifying Exam – which broadly covers the cost of assessment – and £19m recovered from the compensation fund. The final £5m comes from other regulatory income and interest.

Chief executive Sarah Rapson acknowledged that this would be a tough pill for the profession to swallow, but said the draft business plan – put out for consultation today – “represents a conscious decision to invest in the organisation now, rather than accept the higher risks and costs that would ultimately arise from continuing as normal”.

She added: “By investing now to fix and strengthen the SRA’s foundations, and by being transparent about the changes being made, we will create the conditions for sustainable improvement.”

The business plan lists three priorities: operational excellence, developing the ability to proactively identify and address risk, and focusing on “the biggest issues”.

The operational challenge comes against the backdrop of a continuing rise in the number of complaints about solicitors made to the SRA, increasing 45% in the three years to October 2025 to 16,499.

The current review of the assessment threshold test – used to decide whether to take action over a complaint – will mean that fewer investigations are carried out, while the work on risk aims to move the SRA away from “a largely reactive, enforcement-led model towards one where we are better able to spot problems early and take action before harm occurs”.

The regulator is currently developing a supervision function for firms working in areas that pose significant risks. This includes those undertaking high-volume consumer claims work and firms with “complex or higher-risk business structures”.

Focusing on the biggest issues aims to avoid spreading the SRA’s resources too thinly or diverting them away from matters “that pose the greatest risk of harm to the public”.

Again this includes high-volume consumer claims, as well as “safeguarding client money, a focus on professional ethics and acting on alleged misconduct relating to the Post Office Horizon Inquiry, supporting responsible innovation, and continuing to enhance the SQE” – and confidence in it.

Ms Rapson made clear that fundamental reform of client account – including the possibility of doing away with it altogether – remained firmly on the agenda.

This also meant pausing other work, such as activity to build on the evaluation of the transparency rules, and on quality indicators and digital comparison tools.

“Additionally, given the need to focus on our current remit, we will not take forward any further work relating to any potential redelegation of the regulation of CILEX professionals.”

The draft business plan indicates that this will not be the last year of rising practising costs, saying that “the need to continue to build reserves is likely to continue during 2027-28 as we develop a new three-year corporate strategy, which will aim to set out the path to a more stable level of funding”.