Axiom Ince and the Solicitors Compensation Fund
In October 2023, the SRA intervened to close law firm Axiom Ince Ltd to “protect the interests of clients and former clients of the firm”.
Clients who have lost money may be entitled to claim compensation from the Solicitors Compensation Fund, which is managed by the SRA.
Following the news that the amount of missing client money is likely to be much greater than the amount currently held in the fund, it was reported that the SRA was considering a one-time levy on the profession to cover the likely shortfall caused by unprecedented losses from the Axiom Ince, Metamorph and Kingly collapses.
In November 2023, the SRA clarified that it would not be calling on solicitors to make an additional in-year contribution to the fund.
This decision is being kept under review in light of further interventions or other unforeseen events.
On 5 December 2023, the Legal Services Board (LSB) said at a Justice Committee Session on the regulation of the profession that it is exploring options for an independent, objective review of the events leading up to the SRA's intervention into Axiom Ince.
Our chief executive, Ian Jeffery, said: “As the representative body for the solicitor profession, we think it right that our members are not being asked to make an in-year contribution to the compensation fund.
“This decision will protect consumers and maintain public confidence in the fund.
“We maintain that the solicitor profession must be consulted before any decision is made by the SRA on its future approach to such exceptional compensation questions, given that our members would be required to pay for it.
“We will work with the SRA as it seeks to review whether its client protection and compensation fund arrangements are fit for purpose in the future.
“We welcome the LSB’s indication of an independent review of the events leading to the collapse of Axiom Ince and the SRA’s intervention to close the firm.
“As the oversight body responsible for assessing and monitoring effective and transparent regulatory performance, the LSB has the necessary investigation and enforcement powers to ensure that the events and actions relating to this very serious incident are fully brought to light.
“We stand ready to work with the LSB and, as appropriate, the SRA to ensure that all proper assurance is provided to the public and to our members.”
What we’re doing for members
Speaking to the Justice Committee, our president Nick Emmerson said: “If the Compensation Fund is to survive – and that is a key part, I think, of what it is to be a solicitor and the confidence that the consumer can have in us being solicitors – then that will need to be funded.
“However, I absolutely agree that not a penny should go into that until we know what’s happened and that it won’t happen again.”
“This is plainly a very serious situation for the profession and for all of those involved,” Ian added. “It is something we want to see investigated fully.”
When the news was first reported in October 2023, we expressed concerns that our members could be asked to plug a gap of many millions of pounds arising from the collapse of just three firms, which were set up under atypical business models and with their own clear and inherent risks.
Ian said: “we recognise that regulatory decisions are by law a matter for the SRA, but we have a role to be assured that the SRA complies with its statutory duty and the regulatory principles guiding any regulatory action which must be transparent, accountable, proportionate, consistent and targeted.
About the Compensation Fund
The Compensation Fund is a discretionary fund operated by the SRA. Solicitors contribute to the fund through a levy added to the practising certificate fee.
The fund provides compensation to people who are owed money by a regulated law firm. It helps:
- provide a safety net for risks that professional indemnity insurance (PII) is unable to cover
- people who have suffered loss due to a solicitor’s personal dishonesty
- people who have experienced hardship due to a solicitor's failure to account for money they’ve received
- reinforce the public’s trust in the legal profession
We are monitoring the situation, and will work with the LSB and, as appropriate, the SRA to make sure our members' views are heard.
We expect to comment further as the situation develops.