The Solicitors Regulation Authority (SRA) has announced a series of reforms aimed at strengthening protections around client money and reducing the risk of consumer harm. These changes follow a consultation earlier this year and form part of the regulator’s wider programme to improve consumer protection in the legal sector.
You can view the original announcement here.
Why These Changes Matter
Protecting client money is a core responsibility for the SRA, and the new measures are designed to enhance how risks are identified and managed within law firms.
The reforms sit within a broader review of whether the current model—where firms hold client money—continues to provide the right level of protection in the long term.
While that longer-term work continues, the SRA is taking immediate action to improve oversight and accountability across firms.
Key Reforms Being Introduced
The new package of measures focuses on strengthening the current system rather than replacing it. Key elements include:
- Improving compliance with accountants’ reports
The SRA aims to increase both compliance and visibility within the accountants’ reports regime. This will help identify risks to client money earlier and enable intervention before issues escalate. - Strengthening internal compliance arrangements
The reforms will clarify responsibilities within firms and ensure that individuals with significant control—particularly in higher-risk firms—are subject to appropriate checks and balances.
These measures are designed to improve early detection of risks and reduce the likelihood of harm caused by poor governance or ineffective controls.
A Focus on Early Intervention
A central aim of the reforms is to allow the regulator to act sooner where risks emerge. By improving visibility and strengthening oversight, the SRA intends to identify potential issues at an earlier stage and intervene before they develop into serious problems.
This proactive approach reflects a wider emphasis on preventing harm, rather than reacting after it has occurred.
Strengthening Accountability in Firms
In addition to improving reporting and compliance processes, the SRA is also considering whether senior individuals within firms should have clearer personal responsibility for protecting client money and managing associated risks.
This signals a continued focus on accountability at leadership level, particularly where decision-making power is concentrated.
Next Steps and Implementation
The reforms follow a consultation held between December 2025 and February 2026, which explored changes to accountants’ reports and compliance arrangements.
Following this process, the SRA has submitted proposed rule changes to the Legal Services Board for final approval.
Under the new framework, all law firms that hold client money will be required to submit annual accountants’ reports, along with additional information through a declaration.
Building a More Responsive Framework
The SRA has made clear that these reforms are part of a broader ambition to develop a more flexible and responsive regulatory framework. The goal is to ensure that risks can be identified and addressed quickly, reducing the likelihood of harm to consumers.
While longer-term changes to how client money is handled remain under consideration, these immediate steps are intended to strengthen the current system and reinforce confidence in legal services.
Conclusion
The SRA’s reforms represent a targeted effort to enhance the protection of client money through better oversight, stronger accountability, and earlier intervention. By improving how risks are identified and managed, the regulator aims to reduce consumer harm and ensure that the legal sector continues to operate in a way that protects the public.