The Legal Services Board’s (LSB) latest regulatory performance assessment has caused more than a few waves in the world of legal regulation. Its main target? The SRA, which the LSB accuses of falling short on several of its core regulatory functions.
For solicitors already juggling a growing compliance burden, against a backdrop of plummeting relations between the profession and its regulator, the LSB’s findings have been described as alarming yet unsurprising. They are certainly politically charged – especially when set with upcoming leadership changes at the very top of the SRA.
The LSB’s blunt assessment
The LSB’s 2025 performance assessment finds the SRA underperforming in several key areas. Of particular concern are its core authorisation, supervision, and enforcement functions.
The most searing criticism relates to the Axiom Ince scandal, where over £60 million in client money was misappropriated. The SRA, according to the LSB, failed to act promptly and transparently, and didn’t escalate concerns to its own Board in good time. That kind of institutional breakdown raises serious questions about internal accountability and process effectiveness.
But Axiom Ince wasn’t an isolated failure. The report also references concerns about the SSB Group, the collapse of which has led to serious client detriment, suggesting that there were clear warning signs which the SRA did not respond to effectively. Whilst the LSB’s independent review into the SRA’s handling of SSB is still ongoing, its inclusion in this report signals a pattern of weak oversight and sluggish reactions when it comes to emerging risks.
Beyond these examples, the LSB also takes aim at the SRA’s failure to publish pass-rate data for SQE training providers, limiting transparency for students entering the profession.
This is not a “could do better” report. It is a clear message that the SRA’s regulatory model is fundamentally falling short in important areas.
Change at the top
All of this arrives at a moment of leadership upheaval. Both the Chair and Chief Executive of the SRA are due to step down within the next year. Their successors will inherit an organisation under external scrutiny and facing a potential identity crisis.
The big question is: what kind of leaders will take the reins? And with what mandate?
There are three broad paths the new leadership could take:
- A crackdown on the profession – doubling down on regulation to demonstrate strength and restore credibility. More high profile fines and prosecutions, with a general tightening up of rules and guidance.
- Reform from within – focusing on modernising internal systems, governance, and transparency to make the SRA a more effective and responsive regulator, focusing on what really matters to public protection. Perhaps even attempting to heal the relationship between regulator and regulated, leading to a more collaborative approach.
- Business as usual – maintaining continuity, addressing the LSB’s concerns pragmatically but resisting any fundamental shift in philosophy or tone.
It’s likely we’ll see a blend of the first two – at least rhetorically. But external pressures and organisational inertia may make the tanker hard to course correct.
The government’s shadow
The context for all this is a government that has become increasingly vocal about the dangers of over-regulation. From the Department for Business and Trade to the Chancellor’s Mansion House speeches, the message is clear: regulators should support, not stifle, enterprise.
This “pro-growth” agenda is already beginning to shape how regulators frame their strategies.
So, while the LSB may want the SRA to act more decisively in protecting the public, the government wants regulators to “get out of the way” when it comes to innovation and competitiveness.
This tension creates a tricky landscape for the incoming SRA leadership. Crack down too hard, and they risk falling foul of the government’s deregulatory push. Stay too soft, and they risk further erosion of public trust, and potentially more interventions by the LSB.
What does this mean for solicitors?
For the profession, the outlook is uncertain. On the one hand, increased scrutiny of the SRA could lead to a more efficient and transparent regulator, one that better balances its enforcement role with its responsibility to support a healthy legal market. That has to be a good thing.
On the other hand, new and enthusiastic leadership may take a more aggressive stance toward firms, particularly in high-risk areas like AML compliance, financial transparency, and client money handling.
We can reasonably expect more probing and drawn-out authorisation processes, increased reporting demands, and a continuation of strict disciplinary outcomes in the short term. The outgoing leaders won’t want to risk another scandal.
The incoming Chair and Chief Executive will need to rebuild confidence – not just with the public and government, but with the profession they regulate. That requires more than policy tweaks or better PR. It demands a fresh articulation of the SRA’s role in the legal ecosystem, one that acknowledges past failings while setting out a credible vision for the future.
Solicitors should watch closely. The next 12 months could reshape the relationship between the profession and its regulator for years to come.
