Lawyers Covered - November 2025

It can be tough for busy lawyers to find enough time to service clients, make it safely through the regulation obstacle course, win new work and keep up-to-date with developments, but we've got you covered! Welcome to our Lawyers Liability & Regulatory Update, in which we highlight the last month's key developments affecting lawyers and the professional risks they face.

SRA Thematic Review: navigating complaints and supporting vulnerable clients

The Solicitors Regulation Authority (SRA) has recently undertaken a thematic review of first-tier complaints handling, in which it visited 25 law firms and analysed 50 complaint files and surveyed 750 firms across England and Wales. The review focused on how firms recognise, manage, and learn from complaints, which also shone the spotlight on what support there is for vulnerable clients.

Key findings

• Complaint recognition: Only one firm interviewed used the Legal Services Board’s (LSB) full definition of a complaint with most other firms relying on judgement calls, which can lead to inconsistencies and requests for clearer guidance.
• Client information and timescales: 95% of firms notified clients in writing at the outset about how to complain, as required by the SRA Standards and Regulations and most provided final responses within the mandated eight weeks. However, 30% of reviewed files were found to have exceeded this timescale. It was also identified that the complaints procedures on firm websites were often hard to locate.
• Supporting vulnerable clients:  The approach taken by firms to support vulnerable clients varied. 72% offered in-person meetings, 62% provided clear explanations, and 57% allowed extra time for vulnerable clients to reflect on the response/decision.  All firms that were interviewed confirmed they were happy to accept complaints on behalf of clients e.g. from family members, as long as the client had given their consent.
• Monitoring and learning: 22 interviewees monitored complaints at a firm-wide level, using data to identify trends and improve service delivery. Good complaints handling was linked to business benefits, such as client retention and recommendations.

Best practice recommendations

The SRA’s thematic review highlights that best practice begins with proactively asking clients if they wish to make a complaint and having the firm's complaints procedure clearly signposted at every stage. Firms should be flexible in the way clients can raise concerns, and ensure that every process is accessible, particularly for those who may be vulnerable. All processes should be reviewed and updated regularly, and staff should be provided with training as well as continuous support in how to handle difficult situations.

The SRA also encourages a data driven approach and recommends that the complaints information is used to inform a firm's learning and development, with a view to improving their procedures and service delivery.

The FCA's new role in supervising lawyers' AML – further details emerge

The UK government has announced further details of its plan to give the Financial Conduct Authority (FCA) a much larger role in supervising anti-money laundering (AML) compliance across the legal sector.

HM Treasury has launched a consultation (open until 24 December 2025) outlining detailed proposals that would give the FCA new powers including:

• Gatekeeping & Registration: The FCA could register legal firms, perform “fit and proper” checks on beneficial owners, officers, and managers (BOOMs), and refuse or cancel registration if individuals do not pass rigorous checks.
• Risk-Based Supervision & Intervention: The FCA may issue formal “directions” for improvement, require a firm to appoint a “skilled person” to review AML controls, and conduct inspections (including unannounced visits).
• Enforcement Powers: The FCA could impose civil penalties, suspend or prohibit individuals, or initiate criminal proceedings for breaches of AML regulations.
• Funding via Fees: The FCA intends to recover its supervisory costs by charging fees to supervised firms.

Things to consider:

• Conduct a BOOM “fit and proper” review - audit all BOOMs against the proposed fit-and-proper criteria. Confirm documentation is complete, up-to-date, and evidences competence and AML compliance history.
• Strengthen AML Governance and Record-Keeping - review your firm’s AML framework, including policies, risk assessments, client due diligence procedures, and training records. The FCA will expect clear, well-evidenced governance structures aligned with a risk-based approach.
• Prepare for more detailed regulatory engagement - you may be asked for more data, subject to new inspections, or required to make improvements on demand.
• Consider submitting a response to the consultation. Your feedback could help shape how the new regime will work in practice.

LSB intervention following SSB Collapse

SSB Group Limited, which traded as SSB Law (SSB), entered into administration on 4 January 2024. It focussed on "no-win, no fee claims", and brought a number of the cavity wall insulation (CWI) claims. However, according to its administrators, the CWI litigation posed "challenges", which led to its clients receiving adverse costs orders, not all of which were recoverable from the After The Event (ATE) Insurers.

When SSB went into administration, SSB owed £200m to six of its litigation funders, and its former clients were left with large unpaid bills and in many cases adverse costs.

The SRA began investigating after receiving more than 100 reports between January 2019 and March 2024 on SSB's handling of the CWI litigation, and after its clients were left exposed to adverse costs. A SSB Law Victims Support Group, made up of former clients of SSB, gave evidence to the SRA on the effects of the outstanding adverse costs on them. However, it is understood that by April 2023, the SRA had sufficient information to take enforcement action against SSB but failed to do so until October 2023. 

The SRA had originally planned to complete its investigations this autumn, however, this has now been put back to the New Year, due to delays. In the meantime, the SRA has recommended that former clients of SSB facing demands for adverse costs, seek redress by making a negligence claim on SSB's insurance, or complain via the Legal Ombudsman or Financial Ombudsman Scheme for claims against the ATE Insurer for payment under the policy, and/or negotiate the adverse costs with the defendant directly.

The SRA itself came under scrutiny from the Legal Services Board (LSB) in the way it dealt with its investigation, and for failing to act more quickly into the mishandled litigation. The LSB appointed Irish firm Carson McDowell LLP, to assess the SRA's handling of the investigation. Carson McDonell produced a 44-page report, based on the information available to the SRA at the time, and the SRA's own assessment of its procedures (which admitted shortcomings in its approach to the investigation into SSB) and found that the SRA had failed in all cases to properly investigate the reports and to comply with SRA processes. The report recommended four key areas for improvement of the SRA's procedures, which in summary included that the SRA:

1. Improves its knowledge, training and procedures to ensure effective assessment of reports about authorised individuals and firms;
2. Review its process for members of the public submitting a report to the SRA to make it more user-friendly;
3. Improves its processes for investigating reports where a potential regulatory breach has been committed; and
4. Considers what measures can be taken to control the transfer of files upon closure of a firm to ensure the protection of the consumer and public interest.

The LSB accepted the report and has said it will take enforcement action in accordance with its powers under section 31 (performance targets) and section 35 (public censure) of the Legal Services Act 2007. The SRA have now issued an apology.

The LSB was established by the Legal Services Act 2007 (LSA) to oversee the regulators in England and Wales and the observance of the regulatory objectives contained in Part 1 of the LSA, which include protecting consumers and the publics' interests. Whilst The Law Society is the approved regulatory body in England and Wales, it has delegated its function to the SRA. Under the provisions of the LSA, the LSB can intervene when there is reason to believe that an approved regulator has failed to act appropriately to protect and/or promote the regulatory objectives.

It is hoped the outcome of this review may now improve the way reports to the SRA are made, and how the SRA responds to reports against a regulated firm and/or individual.

Renters’ Rights Act: enhanced security for tenants

In September 2024, the Renters' Rights Bill was set out in Parliament.  That Bill has now received Royal Assent, becoming the Renters' Rights Act 2025 (the Act).  Whilst the main provisions of the Act are yet to come into force (and that's not likely to be until at least 2026), the Law Society is pleased with the enhanced protection for private renters the Act brings. 

Marking the biggest reform of the rental market in over 40 years, the Act's key changes:

• removes s21 notices or "no-fault" evictions;
• ends fixed term, assured and assured shorthold tenancies so that all existing and new tenancies will be periodic (or rolling) assured tenancies;
• alters the rent increase process and increases will only be valid with a s13 notice providing two months' notice;
• introduces a new digital database and landlord ombudsman;
• applies the Decent Homes Standard and compulsory timeframes for remediation work under Awaab's Law;
• provides tenants with a right to keep a pet (with insurance if the landlord requests it); and
• unveils new investigatory powers and sanctions for non-compliance (including increase civil penalties and criminal offences) to make it easier for local authorities to take action.

The Law Society president, Mark Evans, welcomes the Act and said: “We’re pleased that the Law Society’s calls to stop landlords asking for more than one month’s rent upfront have been accepted. This helps make renting fairer and more accessible for prospective tenants, making a real difference to their lives…The decision to end ‘no-fault’ evictions addresses a long-standing imbalance that gave landlords an unfair advantage. The act also introduces new and revised grounds for possession. To ensure fairness for both parties, the government must clarify what kind of evidence landlords will need to provide to invoke those grounds…For this act to be successful, the government must now invest in the courts to ensure they can handle the expected rise in contested hearings. Court reform and modernisation is crucial if the Renters’ Rights Act is to help both tenants and landlords…The Renters’ Rights Act is an important step towards a fairer housing system that gives both tenants and landlords the necessary foundation for wellbeing, dignity and stability.”    

You can read our previous article on the Renters' Rights Bill here and our update here.

Public access to court documents: new rules

From 1 January 2026, new rules will come into force in the Commercial Court, London Circuit Commercial Court and Financial List with the aim of improving public access to documents in civil proceedings. The new rules will require legal representatives to add various categories of documents referred to at public hearings to the Court's electronic file, meaning they will be, by default, available to the public. The new rules are governed by Practice Direction 51ZH and are part of a 2-year pilot scheme aimed at improving transparency and open justice in the civil courts.

The new rules will make it much easier for members of the public to obtain publicly available documents as legal representatives will need to file key hearing documents to the court's electronic file.

You can read our full article here.

Hong Kong – Distribution of client account balances following forced closure of law firm

In Hong Kong, an intervention in the practice of a law firm by the Law Society of Hong Kong – the regulator for a solicitors' profession that is self-regulated – usually means that the firm is closed immediately. In a profession that has approximately 925 law firms, there may be on average approximately three or four interventions per year. Some interventions are unavoidable due to (for example) the death or incapacity of a sole proprietor; other interventions may be the result of regulatory action following serious breaches of the Solicitors' Accounts Rules or rare instances of suspected dishonesty by a solicitor or member of staff.

For former clients, an intervention in the practice of a law firm can cause real inconvenience and concern. An intervention is supervised by an "intervention agent" (another law firm) – appointed by the regulator – whose role is (for example) to take control of the closed firm's office and client files and help preserve funds in its bank account(s). Former clients will often have two principal concerns: (i) retrieving any documents that belong to them and transferring their instructions to another law firm; and (ii) claiming any money owed to them that is held in the closed firm's bank account(s).

This gives rise to the question of what the most appropriate method is to distribute the balances held in a closed firm's client account(s) – following an intervention – where there is insufficient money to reimburse former clients after all claims have been verified. This can be a particular concern where a law firm is closed because of serious account rule breaches or suspected dishonesty within the firm.

Recent case law in Hong Kong confirms that where there is insufficient money in a closed firm's client account(s) to satisfy verified claims, the usual practice is to adopt a pari passu approach to distribution – treating like claims alike – rather than a "first in, first out" approach (The Council of the Law Society of Hong Kong v Yeung [2025] HKCFI 3292).

Therefore, where there is insufficient money to pay all verified claims made by former clients, the loss is shared equally. This generally makes sense. Payments into a law firm's client account(s) by their nature do not generally get paid out nor are they treated on a "first in, first out" basis. Further, in those rare instances of suspected dishonesty within a law firm where there is insufficient money to satisfy verified claims, it may be too onerous or impracticable (because of the misconduct) to ascertain the order in which client money was received by the law firm and paid into its bank account(s). 

With thanks to our additional contributors: Catherine Zakarias-Welch, Sally Lord and Aimee Talbot.