The Legal Services Board (LSB) has initiated enforcement action against the solicitors’ regulator over its handling of Axiom Ince Limited
Axiom Ince Limited closed in October 2023 with the loss of 1,400 jobs and approximately £60m client money missing. In November 2023, the Serious Fraud Office (SFO) launched an investigation into the firm, arresting seven individuals in dawn raids across the South East of England.
An LSB-commissioned independent review by Northern Ireland firm Carson McDowell into the Solicitors Regulation Authority’s (SRA) actions before it closed Axiom Ince has found the SRA ‘did not act adequately, effectively and efficiently’.
The review, published this week, concluded the SRA did not take all the steps it could or should have taken, and its ‘actions and omissions in this matter necessitate change in its procedures to mitigate the possibility of a similar situation arising again’.
Alan Kershaw, LSB chair, said: ‘The Axiom Ince case has caused significant consumer detriment.’
The LSB Board is now initiating the process to set directions under s 32 of the Legal Services Act 2007, requiring the SRA to make changes to better achieve its regulatory objectives.
However, Paul Philip, SRA chief executive, said: ‘At the heart of this issue is a suspected complex and well-hidden fraud carried out by a solicitor, with an ongoing criminal investigation by the SFO.
‘The report recognises our “excellent work” in uncovering the suspected fraud. But there are things we could have done better. We moved quickly last year to tighten up some of our processes.
‘There is a lot in the report that we don’t agree with, and we don’t understand the basis for enforcement action. We will be consulting soon on changes to better protect clients’ money. This will include exploring the more radical solution of whether we should stop law firms holding client money.’
Law Society president Richard Atkinson said: ‘While the events leading to Axiom’s collapse were happening, the SRA was focused on increasing its fining powers and proposing regulatory expansion rather than tackling the known risks from accumulator style firms and ensuring its operations were joined up and laser focused on protecting consumers.’
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