Around £60 million in client money was missing and around 1,400 people lost their jobs when Axiom Ince stopped trading in October 2023.

The Legal Services Board (LSB) commissioned Northern Ireland firm Carson McDowell to carry out an independent review into actions taken by the Solicitors Regulation Authority (SRA) before it closed Axiom Ince.

The review found that the SRA did not act adequately, effectively and efficiently; did not take all the steps it could or should have taken; and its actions and omissions in the matter necessitate change in its procedures to mitigate the possibility of a similar situation arising again.

Having considered the 86-page independent report and its findings, the LSB has launched enforcement action against the SRA to ensure the necessary changes are made.

LSB chair Alan Kershaw said: “The Axiom Ince case has caused significant consumer detriment. Our decision to commission a thorough independent review reflected the importance of understanding the SRA’s actions leading up to its intervention in the firm. It was essential to uncover what went wrong to reduce the risk of it happening again.

“The review found that the SRA did not act efficiently and effectively or take all the steps it could and should have, to lessen the impact of what had occurred. The SRA’s actions and omissions have in our view adversely impacted on confidence and trust in the regulation of legal services.

“This review shines a light on issues that may have a bearing across the wider regulated sector. We will continue working closely with the SRA and the other regulators we oversee in the public interest to protect consumers and to uphold confidence in the way in which legal services in England and Wales are regulated.”

Richard Atkinson, president of the Law Society of England and Wales, added: “The independent review paints a vivid picture of the SRA’s inadequate and ineffective handling of Axiom.

“As a result of the SRA’s failure to take all the steps it could or should have taken, Axiom was able to act without intervention, leading to money going missing and huge distress to their clients.”

“Ultimately, it has fallen to the profession as a whole — solicitors and law firms — to shoulder the cost through a substantial increase in contributions to the compensation fund, which is a vital protection for clients and consumers.”