High-volume consumer claims: SRA can learn lessons from SSB

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The Solicitors Regulation Authority (SRA) should reflect on the lessons of the SSB case to protect consumer interests in high-volume consumer claims, the Law Society of England and Wales said today.

The SRA’s discussion paper seeks views on how to better protect consumers involved in high-volume consumer claims and examines the behaviours and practices of some firms in the area.

In its response, the Law Society maintains the SRA should:

• address the internal regulatory failures identified in the LSB review before introducing changes to processes surrounding high-volume consumer claims
• improve transparency and clarity for consumers by exploring creating standardised onboarding protocols and clearer guidance
• not ban the term ‘no win, no fee’, but ensure solicitors use it accurately with caveats to reflect any consumer financial risks
• ensure consumers have the right information to be able to make informed decisions about third-party funding and after the event insurance

“The findings and recommendations of the Legal Services Board’s (LSB) independent review into the collapse of SSB Group Limited informs our response to this paper. The report found that the SRA failed to act effectively and efficiently in response to serious and repeated reports of alleged misconduct,” said Law Society president Mark Evans.

“The SRA must prioritise internal reform before considering changes in this sector, including implementing new rules or guidance. They must proceed cautiously and ensure any changes to this sector are proportionate and evidence based.

“The findings in the SSB case underscore the importance of addressing the risks involved with high-volume consumer claims. The case revealed inadequate financial scrutiny in the SRA’s authorisation and supervision processes, and these regulatory shortcomings should be a priority for the SRA.

“The SRA must have enhanced oversight, accompanied by improved internal systems for intelligence sharing and risk profiling, with a greater readiness to identify red flags and take the necessary action promptly.

“Whilst the SRA’s own thematic review found evidence of good practice in this sector, the Law Society urges the SRA to reflect on the lessons of the SSB case to ensure that future regulatory interventions are timely, proportionate, and sufficient to protect consumers.”

On improving transparency for consumers, Mark Evans said: “The SRA should work with the profession to explore developing standardised onboarding protocols that require firms to disclose key information in plain language.

“This includes the nature of the legal agreement, the potential costs, the risks of litigation outcomes – not only those inherent to litigation, but those particular to the client’s case and individual vulnerabilities – as well as the implications of funding and any insurance arrangements.

“The SSB case revealed that many consumers affected by the firm’s conduct were unaware of the risks they faced, suggesting a need for clearer, enforceable standards for consumer-facing communications.”

Mark Evans added: “No win, no fee is a well-established phrase, familiar to both lawyers and consumers. While it is imperfect, banning its use would likely have unintended consequences and may risk consumer confusion if changed.

“Clients should also be informed of the potential deductions from damages, the basis for any success fee and the possibility of additional costs even if they win.”

Mark Evans concluded: “Third-party funding is vital in enabling access to justice, particularly for those who lack the financial resources to launch a case themselves. However, the funding model is risky, particularly in high-volume claims.

“The Law Society is concerned about possible liquidity risks in some high-volume claims firms, especially when income is solely derived from funders. The SRA should assess whether firms have the right funding and operational capacity and should conduct robust checks to protect consumers from exposure to financial risk.”

Notes to editors

Read the SRA’s high-volume consumer claims discussion paper.

The Law Society’s consultation response is available upon request.