The SRA wants to raise its funding requirement by 29% to £111.5 million, triggering steep increases in practising fees and compensation fund contributions for solicitors and firms.
The regulator says mounting claims linked to collapses including PM Law have placed major strain on the compensation fund.
The SRA is proposing a steep increase in fees paid by solicitors and law firms, as the regulator looks to rebuild its finances following several law firm collapses.
In a business plan published on Friday, the SRA said it wants to increase its overall funding requirement by £25 million - or 29% - to £111.5 million for 2026/27.
The proposals would see the SRA portion of the annual practising certificate fee for individual solicitors rise from £190 to £240. Firm fees, which are based on turnover, would also increase.
At the same time, contributions to the SRA compensation fund are set for much steeper rises. Individual solicitor contributions would jump 71%, from £70 to £120, while firm contributions would increase 85%, from £1,950 to £3,600.
Pressure on the compensation fund
The SRA said the proposals come amid growing pressure on the compensation fund, which is used to compensate clients who lose money due to failures at regulated firms.
The regulator pointed to the collapse of PM Law as a major factor behind the latest increase, saying claims linked to the firm already exceed £20 million.
The collapse is the latest event to place the regulator and the fund under strain following the high-profile failure of Axiom Ince in 2023, which ultimately led to more than £40 million being paid out to former clients. It also followed the collapse of Shefilled firm SSB, which saw the Legal Services Board censure the SRA over its handling of the failure.
The SRA said it now wants to move towards a more “intelligence-led” regulatory model focused on identifying risks earlier and intervening more proactively.
Chief executive Sarah Rapson, who joined the regulator in November last year, said: “We can’t meet today’s demands and achieve what is needed by doing more of the same.”
“That means making bold and sometimes difficult choices to protect the public.”
Law Society response
The proposals drew a cautious response from the Law Society, which said the scale of the increases would be a major concern for the profession.
Law Society president Mark Evans said: “A substantial proposed increase is deeply concerning.”
“We support the principle of the Compensation Fund which is a vital protection for consumers and clients. Several failures, including most recently PM Law, have placed considerable strain on the resources of the Compensation Fund and we recognise the need to rebuild the fund’s reserves.”
But Evans said solicitors were now being asked to shoulder the cost of regulatory failures linked to Axiom Ince and SSB.
“We cannot forget that it is the hard-working front line of the profession that bears the cost of fixing an organisation, which had lost focus on its core role as demonstrated by its failures over the Axiom Ince and SSB collapses,” he said.
He added that any increase “approaching anything like the scale now being proposed” would need to be accompanied by a “credible and transparent plan” from the SRA to deliver lasting improvements.
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