The Legal Services Board will outline details of its review into the Axiom Ince affair next month and report its findings in the spring, the oversight regulator announced yesterday.
The review will look at events leading up to the SRA’s intervention into the collapsed firm earlier this year. The LSB will work with Northern Ireland firm Carson McDowell – which is not regulated by the SRA – to lead the review.
‘This was a significant case with considerable consumer detriment,’ the LSB said yesterdy. ‘In the board’s view, it will be important for public and professional confidence that any learning can be identified with independence, and that any conclusions that may be drawn are based on an objective assessment of the facts.’
The LSB stated that the SRA had made clear its intention to co-operate fully with the review.
Welcoming the announcement, Law Society chief executive Ian Jeffery said: ‘As the oversight body responsible for assessing and monitoring effective and transparent regulatory performance, the LSB has the necessary investigation and enforcement powers to ensure that the events and actions relating to this very serious incident are fully brought to light. We stand ready to work with the LSB and, as appropriate, the SRA to ensure that all proper assurance is provided to the public and to our members.’
Axiom Ince was shut down after several weeks of turmoil, which began when the regulator suspended former managing partner Pragnesh Modhwadia and two other directors.
Axiom DWFM, as it was then, had bought the much larger practice Ince & Co in April and then Plexus Legal in July. Three months after the Ince deal was announced, the SRA sent in two investigators to inspect the firm.
It emerged later that there was a £64m hole in the client account, and that Modhwadia had used some of this money to make the acquisitions and buy and renovate various properties.
The SRA has been criticised for not picking up on the issue sooner, but it insists it made all the checks that were required under its regulatory obligations.
Former clients of the firm have made claims worth more than £30m to the compensation fund – outstripping the £18m reserves kept in the fund. Practitioners are likely to have to pay extra in contributions to meet clients’ claims, but the SRA has opted against a one-off levy.
The LSB yesterday refused a freedom of information request for more information about its scrutiny of the Axiom Ince collapse.
The organisation was asked for a copy of all information, documents and correspondence, internal and external, in relation to Axiom Ince and the potential consequences of its closure.
The LSB said the request could not be answered within 18 hours and so could not be completed at a proportionate cost.
