A significant reset is proposed, but it comes at a cost to solicitors and firms. Here’s what you need to know, and why your response matters.

The Solicitors Regulation Authority (SRA) has opened a consultation on its draft Business Plan and funding requirement for 2026/27, and the profession’s reaction has been swift and, in places, sharply critical. The consultation closes at midday on Monday 22 June 2026, leaving a narrow window for firms and individuals to have their say. Given what is being proposed, that window is worth using.

What the SRA is proposing and why

The headline figure is hard to ignore. The SRA is seeking a 29%, or £25 million, increase in its funding for the 2026/27 practising year, translating to its portion of the practising certificate fee rising from £190 to £240 for individual solicitors.

That is before the compensation fund is factored in. Proposed compensation fund contributions for 2026/27 would rise from £70 to £120 for individual solicitors and from £1,950 to £3,600 for SRA-regulated firms. The proposals mean every practising solicitor would pay an additional £100 towards regulation and public compensation.

The SRA has been candid about why. Its new Chief Executive, Sarah Rapson has acknowledged in her foreword to the Business Plan that the organisation has not consistently met the standards expected of it in recent years. She said: “Put simply, we need to change how we work. We can’t meet today’s demands and achieve what is needed by doing more of the same.”

The plan identifies three core priorities for 2026/27: operational excellence (investing in IT, casework reform and culture); proactively identifying and addressing risk (moving away from a purely reactive, enforcement-led model towards earlier engagement and intelligence-driven supervision); and focusing on the biggest issues – principally client money protection, high-volume consumer claims, the Solicitors Qualifying Examination (SQE), and responsible innovation in legal services.

The context: a regulator under pressure

The scale of the proposed increase cannot be understood without appreciating the regulatory backdrop from which it emerges. Between 2022 and 2025, the number of misconduct reports assessed by the SRA rose by 45% to 16,499, and there has been a costly rise in the number of interventions, with 35 in the first six months of 2025/26 alone, compared to 42 in the whole of 2024/25.

The compensation fund has also come under exceptional strain. The highest sum previously levied for the compensation fund was £31.6 million in 2024/25 – the year thousands of claims were made by clients of the collapsed firm Axiom Ince. The total contribution fell to £26 million last year, but will soar to £46.3 million in 2026/27 after the unexpected closure of PM Law in February piled another heavy burden on the fund. As of April 2026, applications for compensation related to PM Law have reached an estimated £20 million, with more expected. The Law Society Gazette

Crucially, the SRA is not only responding to market pressures – it’s also operating under formal enforcement action from its own regulator. The Legal Services Board (LSB) issued a formal public censure against the SRA in March 2026, following an independent review that found a series of serious and repeated failures in the SRA’s handling of concerns about the SSB Group. As part of the enforcement action, the LSB directed the SRA to set and publish mandatory performance targets to address the identified failures. This follows separate statutory directions imposed on the SRA over its oversight of Axiom Ince – with the LSB noting approximately £100 million in cumulative client money losses associated with the failures of Axiom Ince and PM Law, and describing the SRA as being under three statutory enforcement measures, which it called exceptional in the history of legal services regulation.

How the profession is responding

The reaction from within the profession has been one of genuine concern – and, in some quarters, significant frustration.

Law Society president Mark Evans described the proposed increase as “deeply concerning,” adding: “We support the principle of the Compensation Fund which is a vital protection for consumers and clients. Several failures, including most recently PM Law, have placed considerable strain on the resources of the Compensation Fund and we recognise the need to rebuild the fund’s reserves.”

However, the Law Society’s support for the principle of the fund has not translated into uncritical acceptance of the proposed scale of the increases. Evans said solicitors were being asked to shoulder the cost of regulatory failures linked to Axiom Ince and SSB, stating: “We cannot forget that it is the hard-working front line of the profession that bears the cost of fixing an organisation which had lost focus on its core role.” He added that any increase approaching the scale now proposed would need to be accompanied by a “credible and transparent plan” from the SRA to deliver lasting improvements.

The Law Gazette characterised the proposals as a “shock budget raid on the profession,” while Legal Cheek reported that the Law Society pushed back on the scale of the proposed increases, with Evans arguing that solicitors were being asked to clean up after regulatory failures they had no part in.

Commentary in the Today’s Conveyancer went further still, questioning whether the current regulatory settlement remained fit for purpose, arguing that the profession alone cannot continue to shoulder unlimited liability for systemic failures.

The Law Society has confirmed it will be responding to the consultation and is actively encouraging its members to do the same.

What the Business Plan means in practice

Beyond the fee headlines, the plan contains substantive changes to how the SRA intends to operate that firms should be aware of:

Proactive supervision is coming. The SRA intends to establish a new supervision function, building on pilots launched in 2025/26, with a focus on early engagement with firms in high-risk areas – including high-volume consumer claims and those with complex business structures. This represents a meaningful shift away from purely reactive, complaint-driven regulation.

The investigation threshold is being reviewed. The SRA is implementing a new Assessment Threshold Test (ATT) designed to reduce the number of lower-risk cases entering formal investigation, freeing resources for the most serious matters. Firms should expect a more targeted – but potentially more intensive – approach to enforcement in genuinely high-risk areas.

Client money reform is a priority. The plan signals that the SRA will explore longer-term alternatives to the current model of solicitors holding client money, including new technology-enabled approaches and senior accountability frameworks drawn from other regulated sectors.

Some workstreams are being paused. The SRA has confirmed it will not be progressing its transparency rules evaluation, digital comparison tools work, or its previously proposed expansion to regulate CILEX professionals. The plan represents an explicit narrowing of focus onto what the SRA regards as the most pressing risks.

What should your firm do?

This is an open consultation and the profession has until midday on 22 June 2026 to respond. Given the scale of the proposed fee increases and the significance of the regulatory reforms being proposed, we strongly encourage all firms to engage. The SRA’s online response form is straightforward, and the full draft Business Plan and impact assessment are available to download from the SRA’s website.

Whether your concern is the fee increases, the direction of regulatory reform, or the impact on smaller firms, this is your opportunity to put your views on record.

Please get in touch with us if you would like to discuss how the proposed changes may affect your firm.