It must provide quarterly written reports on progress to the Legal Services Board (LSB), and commission independent external auditors within 12 months to evaluate its compliance and identify any other weaknesses.
Catherine Brown, interim chair of the LSB, said: ‘The severity of what happened at Axiom Ince—with £60m in client money missing and 1,400 people losing their jobs—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.’
The directions, which are binding under the Legal Services Act 2008, require the SRA to ‘revise its regulatory arrangements and guidance to… protect consumers and the public from potential harm arising from a single individual holding more than one role in a firm or other authorised body eg owner, manager, compliance officer for legal practice, compliance officer for finance and administration, and money laundering compliance officer’.
Axiom Ince grew rapidly through a series of mergers and acquisitions before being closed by the SRA in October 2023. The firm’s owner held multiple compliance roles.
The SRA must also ‘ensure firms have effective safeguards to protect client money’ and ‘put in place measures to enable more effective risk-based scrutiny of firms undergoing sale, merger or acquisition’.
The SRA is due to make a decision before the end of this year on whether it will go ahead with its proposals to stop firms handling client money.
Paul Philip, SRA chief executive, said: ‘We have been working over the past months with the LSB on our plan to address and implement its directions.’
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