The independent serious event review published on 3/9/26 by the London office of US Law firm, Jenner & Block, has concluded that the SRA had the information and opportunities it needed to take action long before the Sheffield-based PM Law group collapsed.
The PM Law group shut down suddenly in February this year and was only then intervened in by the SRA. The Review has concluded that “The SRA held more information about the PM Law Group than was ever drawn together into a single, coherent risk picture.” And this “failure to aggregate information” resulted in missed opportunities to act before the group collapsed, resulting in significant damage to clients and staff of the various law firms in the group.
The information held by the SRA included that gleaned from two forensic investigations, an AML inspection and a thematic review visit (the one into compliance officers), as well as “numerous reports” about group firms, and the SRA’s conclusion back in 2024 that it was a high-risk ‘accumulator’ firm (albeit it transpires that the SRA didn’t fully understand the group structure). Given a fraud of around £40m is suspected, with the Compensation Fund being called upon again, this is another significant blow to the SRA, following on from similar issues in relation to Axiom Ince and the SSB group and the associated condemnation of the SRA, and despite the changes the SRA promised they had made to prevent further similar scenarios.
The Review’s conclusions highlight the apparent lack of joined-up thinking at the SRA, with different teams working in silos and using different systems, resulting in a serious lack of shared knowledge.
What next for the SRA?
The review has identified three ‘structural gaps’ for the SRA to address, covering technology, training in relation to the financial position of complex group structures, and better escalation procedures within the SRA. The SRA’s initial response says they are focussing on:
- client money, including the new rules on compliance roles (currently on hold – see our blog on the Compliance Officer Rule changes here) and accountants’ reports; enhanced notification requirements for prescribed events (see their consultation which closed on 17/8/26, the response to which is awaited); whether to scrap the current model of firms holding client money at all; the possibility of a ‘senior manager accountability scheme’.
- data, risk and supervision, aiming to develop an intelligence and data-driven approach with better use of technology to create a more joined-up approach within the SRA.
- capacity and ways of working, adding staff and carrying out a full review of their litigation and enforcement process to improve efficiency.
It looks like the SRA will be needing every penny of the significantly increased practising certificate fee – a significant cost to the profession, particularly smaller firms. Sarah Rapson’s (SRA’s CEO) promise to rebuild trust in the profession may be looking a little hollow to some at the moment.
Food for thought?
Can firms also learn lessons from the SRA’s mistakes? Think about how you hold your data. Is your COLP/ management team able to easily aggregate information and draw together a single coherent risk picture from different teams, for example about clients/ firm risks so that you can act before disaster strikes?