Follows Axion Ince closure
The Legal Services Board (LSB) has approved plans to increase the contributions solicitors must make to a special compensation fund by a whopping 200%.
Earlier this year, the Solicitors Regulation Authority (SRA) announced plans to increase the annual levy for solicitors to £90 for 2024-25, up from the previous £30. Law firms will also see their contribution rise from £660 to £2,220.
The plans have now been given the go ahead by the LSB.
The compensation fund, managed by the SRA, is designed to help individuals owed money by a regulated law firm. Solicitors contribute to the fund through a levy included in their practising certificate fee.
Legal Cheek first reported on the proposals in May, when the regulator explained that the increase was necessary to rebuild the fund, which had been “significantly impacted” by a sharp rise in interventions and claims over the past 18 months.
These interventions include the case of Axiom Ince, where £64 million was discovered missing from the firm’s client account. The SRA revealed last November that former clients were seeking approximately £30 million in compensation, while the fund was estimated to hold around £18 million at that time.
Commenting on the decision, Law Society chief executive officer Ian Jeffery said:
“The SRA’s request for additional funds is largely the result of the collapse of Axiom Ince and the cost of compensating its victims. We expect the independent review of the SRA’s performance on this matter commissioned by the LSB to be published as soon as possible, so that the lessons can be learned. We also strongly encourage the SRA to prioritise its focus on core activities and only undertake additional workstreams based on evidence of regulatory need, or specific gaps in responding to consumer needs, rather than looking for additional fining powers.”
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