The Solicitors Regulation Authority (SRA) has shared an update following its recent consultation on safeguarding client money and providing redress. The consultation, which closed on 21 February 2025, received over 450 responses, along with insights from engagement events, previous discussion papers, and in-depth consumer research.

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The consultation explored both immediate measures to better protect client money and longer-term questions around:

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• The model for solicitors holding client money.

• The funding of the Solicitors Compensation Fund, which protects clients if funds held by solicitors are misappropriated.

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The SRA has acknowledged that while there is interest in addressing root causes of client money risks, these are complex issues that require careful consideration.

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Immediate focus
The SRA’s current priority is to strengthen protection for client money under the existing system. This focus aligns with the strategic priorities in their proposed 2025/26 Business Plan and Budget, as well as the relevant Legal Services Board Directions following the Axiom Ince matter.

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Progress reports and proposals for consultation on several key areas will be published later this year, alongside responses to the consultation (where permission has been granted).

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Long-term considerations
Longer-term questions regarding the model of holding client money and the funding of the compensation fund will be revisited after the immediate improvements are implemented. This will allow the SRA to engage further with stakeholders and give these complex topics the robust consideration they require.

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Compensation Fund contributions
One consultation topic already addressed is the 2025/26 compensation fund contributions. Following feedback, the SRA confirmed that the 50/50 split of contributions between individuals and firms will remain.

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The SRA encourages continued participation and feedback and will provide further updates at the upcoming Compliance Conference and through later consultations.

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For more information on the consultation and next steps, visit the SRA website.