Anna Bradley Chair of the Board, Solicitors Regulation Authority
This is our second full year of operating as Solicitors Regulation Authority Limited and the third report covering our activities as a distinct legal entity (DLE) within The Law Society Group. The arrangements are now established and working well. They deliver more transparency for the profession and the public about the roles and responsibilities of the Solicitors Regulation Authority (SRA) as the regulator and the Law Society as the professional body for solicitors in England and Wales.
As a regulator, we must be able to identify changes in the sector and respond swiftly and, in 2022/23, there was a lot of change. One of the biggest shifts has been around firm failures, and the potential impacts these have on consumers. There has been a significant increase in the number and scale of interventions we have had to carry out into firms. Most interventions are into small firms, however we have in the past four years intervened into three large firms, following a period of ten years with no such large firm interventions. In 2023, we made the largest ever intervention into Axiom Ince, where we found more than £60m of client money missing.
We have ensured consumers are protected in all these cases, but with the changing profile of risk, we need to be sure we can continue to protect the public appropriately in the future. This is why we have launched a review of consumer protection. The review will be a demanding piece of work for us, including extensive engagement with the public and the profession to explore all options and ensure we arrive at the right future approach.
We are also dealing with other high-profile cases, including an ongoing investigation into the Post Office Horizon scandal. As one of the largest miscarriages of justice in our country, serious questions are raised about the role of some of the lawyers and law firms involved. It is essential we can hold those who have acted unethically to account and avoid any further erosion of trust in the profession linked to this scandal. We are therefore committing significant resource to these cases and working in tandem with the Inquiry.
Too many people struggle to get access to expert legal help when they need it, and while we cannot solve this problem, we can make a contribution.'
We also began to use the increased fining powers we were given. As a result, we are now able to resolve issues more quickly, saving time and cost for everyone. We have also been overhauling our case management arrangements to reduce the time it takes us to conclude cases. We have made significant progress but have more to do.
Looking beyond our enforcement work, we have monitored the progress of the new Solicitors Qualifying Examination (SQE). More than 8,000 took the exams in 2022/23, and the number is growing fast. The assessment provides assurance that all qualifying solicitors have met the same, high standard.
Too many people struggle to get access to expert legal help when they need it, and while we cannot solve this problem, we can make a contribution. We are focusing on the way that new technology could help to bridge the gap. So, we continue work to support innovation and help firms adopt new technologies. We have secured further government funding to support such projects.
You can read more about how we have delivered against the three objectives in our 2020–2023 strategy in our business review in this report. We also developed our strategic plan for the next three years, engaging with close to 17,000 people. The new plan builds on our previous strategy with the singular aim of driving trust and confidence in legal services.
Our consolidated expenditure increased significantly, by £32m, in 2022-23. The two main reasons for the increase were rechargeable costs of administering the Compensation Fund, and our education and training expenditure on the SQE, funded through candidate fees.
Consolidated income also increased by £51m. This was largely driven by the same reasons, in addition to the one-off impact of consolidating the Solicitors Indemnity Fund. Further detail around these changes in the financial statements is included in this report.
The Board kept a focus on tight budgetary control as new priorities emerged throughout the year, identifying how to work effectively and deliver value for money. We committed to managing within the budgetary envelope we set for the three-year corporate strategy and have done so. However, despite a small surplus in 2023, reserves for the SRA only remain slightly below the range set by the Board.
Income from practising fees for the new corporate strategy (2023–26) has been set at a level that ensures we can deliver against our new objectives. But we have had to adjust plans for the pace of this work to ensure we have the resource for ongoing work, such as the consumer protection review.
We are pleased with our progress in reducing our carbon emissions and continue to pursue an investment policy that ensures we only invest in funds where we can be confident of high environmental, social and governance standards.
We are fully committed to good governance, to transparency and to accountability, and hope you find the contents of this report helpful. More information is available on the SRA website, including regular reporting on decision making and performance. We are always open to hearing your views and your feedback.