The relationship between the Legal Services Board (LSB) and the Solicitors Regulation Authority (SRA) has reached a new low point.

On 3 September 2026, the LSB announced further enforcement action against the SRA, concluding that the frontline regulator has not yet demonstrated it can consistently protect consumers from the kind of firm failures that have dominated headlines over the past two years.

For firms, COLPs and COFAs watching from the sidelines, it’s a signal about where scrutiny is heading next, and what the SRA will likely expect of the profession as it tries to rebuild its own credibility.

A third round of enforcement

The SRA is now subject to an unprecedented three concurrent statutory measures under the Legal Services Act 2007:

• Section 32 Directions, issued in May 2025 following the collapse of Axiom Ince and the loss of £60 million in client money, requiring the SRA to strengthen how it identifies and responds to risk.
• Section 31 performance targets and a Section 35 public censure, imposed in March 2026 after the failure of SSB Law.
• Additional performance targets and consolidated reporting, confirmed this month following the collapse of PM Law Group in February 2026.

The Directions issued after Axiom Ince were meant to be met within twelve months, a deadline that expired this summer. Rather than lifting them, the LSB has decided the evidence doesn’t support that step. Instead, oversight is being tightened further.

What the independent reviews found

The LSB’s decision leaned heavily on two commissioned reports. A Serious Event Review by Jenner & Block into the SRA’s handling of PM Law identified weaknesses strikingly similar to those flagged after Axiom Ince: poor use of intelligence held across the organisation, inadequate investigation of complex financial risk, and slow escalation of serious concerns to senior decision-makers. Some of these issues, the LSB noted, have been known to the SRA since 2023.

A separate assurance review by the Berkeley Partnership took a more measured view. Of the 60 actions in the SRA’s plan to meet the Directions, 48 have been fully delivered and five partially met, with the remainder tied to future milestones. None have been missed outright. But the LSB was clear that delivering a plan is not the same as improving outcomes.

The combined losses linked to Axiom Ince and PM Law now stand at roughly £100 million – a figure the LSB says explains why it isn’t prepared to take the SRA’s word that things have improved.

The next steps in the LSB’s toolkit

The measures announced this month include additional, more rigorous performance targets, a single consolidated implementation plan replacing the current patchwork of commitments, and more frequent independent assurance reviews rather than an annual check-in. Separately, the LSB has approved the SRA’s 2026/27 practising fee application, which includes extra investment in regulatory capability – but has made clear that funding alone won’t satisfy it. The SRA will need to show what that money actually changes for consumers.

The LSB also used unusually direct language about the SRA’s own board, describing itself as disappointed in the standard of leadership and accountability shown so far. It stopped short of using its more severe powers, i.e. intervention directions under Section 41, or cancellation of designation under Section 45, but was explicit that these remain available if progress continues to lag.

The Law Society has backed the LSB’s approach, with president Mark Evans indicating that the profession needs confidence that increased funding will translate into real improvements for solicitors and consumers alike.

Why this matters beyond the regulatory headlines

It’s tempting to read this as a dispute that plays out entirely above the heads of practising firms, but that would be wrong. An SRA under this level of oversight pressure has every incentive to demonstrate faster, more visible enforcement – earlier intervention on risk indicators, closer scrutiny of firm structures and financial controls, and less tolerance for gaps between what a firm reports and what its systems actually show.

The specific failings identified in PM Law and Axiom Ince i.e. concentration of ownership, compliance and management roles in one individual, weak escalation of concerns, and financial risks that went uninvestigated for too long, map directly onto areas the SRA already expects firms to address through COLP and COFA oversight, client account controls, and honest reporting of material developments. A regulator under pressure to show it can catch problems early is a regulator that will look harder at exactly these areas during supervision visits and file reviews.

What this means in practice for firms

None of this changes the SRA Standards and Regulations. But it does change the environment in which they’re enforced. Firms should expect:

• Faster escalation of concerns raised with the SRA, rather than issues sitting unaddressed for months or years.
• Closer attention to authorisation and ownership structures, particularly where compliance and management functions sit with the same individual.
• Greater emphasis on demonstrable outcomes, not just documented policies — a theme that has run through the SRA’s recent AML sectoral risk assessment and financial crime work as much as its own institutional reform.

Firms with clear separation of COLP and COFA responsibilities, well-evidenced risk assessments, and file review processes that can show – not just claim – effective oversight will be far better placed as the SRA sharpens its own approach under LSB pressure. Our recent piece on the SRA’s approach to supervision following the Mazur ruling covers related ground on how enforcement priorities are shifting, and our review of the SRA’s 2026/27 Business Plan consultation sets out where additional regulatory investment is likely to be directed.

How Enderley can help

If this level of institutional scrutiny has you wondering how your own firm’s governance and compliance arrangements would hold up, Enderley Consulting can help you find out before the SRA does. We offer:

• Compliance audits and gap analysis
• COLP/COFA support retainers
• Annual declaration preparation
• Staff training via our Enderley Infohub webinar platform

Get in touch to discuss how we can support your firm’s compliance framework.