The biggest regional law societies in England and Wales have called for the profession’s regulator to reconsider its decision not to cap Axiom Ince claims from former clients.
The Solicitors Regulation Authority (SRA) shut the firm down in October 2023 after it emerged that around Stg £64 million was missing from client accounts.
According to the Law Society Gazette of England and Wales, solicitors are likely to have to pay for any shortfall caused by claims against the compensation fund from former Axiom Ince clients.
‘No one-off levy’
By the end of November, the SRA had received claims totalling £33 million, but the fund had reserves of only £18 million.
The regulator has said that there will not be an immediate one-off levy against solicitors, but has suggested that contributions are almost certain to increase later this year to cover the claims.
The SRA has the statutory power to limit total claims to £5 million, but has said it will not use its discretion to impose an overall cap.
‘Accountable’
The Gazette says that the law societies of Birmingham, Bristol, Leeds, Liverpool and Manchester – collectively known as the ‘Joint V’ – have now written to the oversight regulator, the Legal Services Board, asking for the SRA’s decision to be re-examined.
The letter points out that the cap of £5 million was introduced to address the risk of “multiple applications … that relate to the same or connected underlying circumstances”. It adds: “The present circumstances fall fairly and squarely within that provision.”
Section 28 of the Legal Services Act requires that the SRA be accountable, and the Joint V said that the scale of losses of client money was such that the profession needed “independent assurance that confidence in the SRA’s governance is warranted”.
The letter continues: “Section 28 requires that [the SRA] exercise its power in a manner which is proportionate. We are unable to see how failure to impose the cap where the claims may exceed it by 13 times might be proportionate.”
The Legal Services Board has started a review of the SRA’s supervisory role in the build-up to the collapse of Axiom Ince.