Super-regulator takes action against SRA over £60m Axiom Ince collapse

The Legal Services Board (LSB) has taken enforcement action and issued binding directions against the Solicitors Regulation Authority (SRA) following its handling of the collapse of Axiom Ince, where over £60 million in client money was lost.

It’s the first time the super-regulator has used its enforcement powers under section 32 of the Legal Services Act 2007. The move follows an independent review published last year that identified serious regulatory failings in the lead-up to Axiom Ince’s collapse in October 2023.

The review, carried out by Northern Irish firm Carson McDowell, found the SRA had not adequately addressed risks arising from Axiom Ince’s rapid expansion and the concentration of compliance roles in one individual - the firm’s owner and CEO Pragnesh Modhwadia.

The collapse led to the loss of around 1,400 jobs and is one of the largest interventions in SRA history.

Enforcement action

The LSB has now ordered the SRA to take a series of steps to avoid a repeat, including tougher safeguards around client money, stricter oversight of firms’ ownership and governance structures, and more proactive risk detection. The SRA must report back every three months, with full compliance expected within a year.

“The severity of what happened at Axiom Ince demanded decisive action, and we welcome the SRA’s constructive engagement with us during this statutory process. The directions we've issued are designed to protect the public and better ensure client funds are properly safeguarded", said LSB interim chair Catherine Brown.

Law Society backs action

The Law Society welcomed the LSB’s move, calling it a proportionate response to clear regulatory failures.

“The directions reflect the unanimous feedback that the next steps must be clear, measurable and proportionate", said president Richard Atkinson. “The decision strikes the right balance between strong consumer protection and avoiding unnecessary regulatory burden."

The Law Society stressed it had no involvement in the SRA’s handling of the matter but supported the LSB’s approach.