The catastrophic collapse of Axiom Ince could derail plans for the Solicitors Regulation Authority to take over the regulation of legal executives, it has emerged, after CILEX revealed it has asked for assurance that its members will not have to foot any part of a potential SRA compensation bill.
CILEX moved a step closer to switching regulator last Thursday, declaring that it received ‘strong support’ from the profession, employers and consumers for its plans. it conceded that negative feedback was also received – but blamed this on press coverage of the Axiom Ince collapse.
A ‘summary of consultation responses’ document states: ‘The timeline of when negative responses were received (both online and during in person events and webinars) correlates to the announcement that the SRA may need to raise fees or collect an exceptional fee from its regulated community to finance the multi-million-pound compensation claims anticipated.
‘When answering this question and the question below re adverse impact on legal professionals, respondents expressed a fear that CILEX members would be required to contribute to the cost.’
The document says the SRA ‘previously made a public commitment that there will be no cross-subsidy between professional groups. Furthermore, if agreed, the transfer from CRL to SRA will not take place before January 2025, which would be after any additional charges would have been apportioned’.
The Gazette asked CILEX to categorically confirm that CILEX members will not have to contribute to the cost of expected compensation claims in relation to Axiom Ince.
CILEX replied: ‘Our proposals are clear in laying out the principle of no cross-subsidy between CILEX lawyers and solicitors. However, in the light of the Axiom Ince case, the details of which emerged after our consultation began, we are seeking assurances from the SRA as to the implications for CILEX professionals and the future of the SRA’s compensation fund arrangements more generally.’
The legal press’s ‘misreporting’ of comments made by the SRA chief executive at a conference was also blamed for negative feedback.
Just under two thirds (63%) of respondents from the regulated community said they agreed that SRA regulation would support the equal treatment and recognition of legal professionals regardless of route to qualification, and provide equality of opportunity for individual practitioners and entities.
CILEX’s document says: ‘The data shows a spike in negative responses to this question directly following comments made by the SRA CEO being misreported in the legal press. The comments which were made during a conference Q&A session and related to the cost of regulating CILEX members and its impact on solicitors were misrepresented as suggesting CILEX Lawyers are “insignificant”. In fact, he was explaining that the number of CILEX lawyers did not add greatly to its existing regulatory caseload.’