The Solicitors Regulation Authority (SRA) revealed in October that it was considering a levy to raise funds for losses arising from the collapses of Axiom Ince, Metamorph and Kingly. The compensation fund, which protect clients, has £18m in its reserves, which is unlikely to cover fund payouts concerning the firms. The SRA closed down Axiom last month, the Metamorph group in January and Kingly in August 2020.
However, Law Society chief executive Ian Jeffery said this week: ‘We are of course greatly concerned that our members could be asked to plug a gap of many millions of pounds in the compensation fund arising from the collapse of just three law firms, which were set up under atypical business models and with their own clear and inherent risks.
‘We would expect the solicitor profession to be consulted before any decision is made by the SRA on its approach to these exceptional compensation questions, given that our members would be required to pay for it and it is their collective reputation at stake. As a representative body 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.’
SRA Board chair Anna Bradley, in a post last week on her reflections on the board’s October meeting, said the ‘big increase’ in the number of interventions meant an interim levy was being considered and an increase in levies overall was likely. Bradley wrote: ‘We recognise that would have a big impact on firms, particularly smaller, high-street solicitors.’
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