Regulatory Pulse - 14 April 2026

Bringing you up to speed with developments in solicitors' regulation over the last few weeks.

The biggest news this edition has been the Court of Appeal's reversal of Mazur. Without getting into the history of the case and the detail of the decision, what are the main takeaways?

1. Absent an appeal to the Supreme Court, the industry-wide concerns which arose from the first-instance judgment concerning non-solicitors acting in litigation and signing court documents have been resolved. Unauthorised persons such as paralegals are permitted to undertake a broad range of work in litigation under appropriate supervision by a solicitor (or other authorised person).

2. The wave of costs challenges and County Court decisions on entitlement to conduct litigation which arose following the first instance decision is likely to recede.

3. The conduct of litigation must be supervised by a solicitor (or other authorised person). The degree of supervision required is context specific. The Court of Appeal left the detail to the regulators, but specifically endorsed the practice, in appropriate matters such as simple debt recovery, whereby an authorised person conducts regular meetings with unauthorised fee-earners and samples their work.

The Law Society issued an updated practice note on compliance with the newly-clarified requirements on Monday. The LSB and SRA each released statements of intent to ensure that practitioners receive updated guidance following the Court of Appeal's decision.

***

Ahead of the proposed transfer of AML supervision to the FCA, OPBAS has warned that some legal and accountancy regulators "may still be taking an overly member-centric approach" and failing to undertake “sufficiently dissuasive disciplinary measures” over non-compliance with anti-money laundering rules. The oversight body reported that "We still see some [regulators] are overly relying on ‘assisted compliance’ to correct failures through a disproportionate focus on working with firms." Those statements might provide a taste of how the FCA will approach professional services AML regulation in its new role.

***

The Office for Legal Complaints has published the Legal Ombudsman's 2026–27 business plan and budget, predicting a whopping 17,675 complaints over the next year – almost double the level it received only two years ago, and exceeding the LeO's "worst-case projections". "That is a staggering increase – so significant that it outstrips the jump in LeO’s own operational output. It is beyond what LeO’s current operating model can deal with." (The LeO was already feeling the pinch, following the LSB's slashing of a budget increase requested in November, warning that new complaints might take over a year to resolve).

The LeO pins the blame for the increased demand primarily on "service issues and ongoing failures in tier 1 complaints handling", and it seems likely firms will come under increasing pressure to resolve complaints internally. The Ombudsman is in this regard seeking input on a Model Complaints Resolution Procedure which it hopes will help "improve the consistency and quality of complaint handling across the legal sector."

The LeO has however acknowledged the role played by generative AI in driving the increase, and is preparing to fight fire with fire, proposing to develop an "AI writing engine" to assist in writing final decisions. We wonder if this could develop into an early trial of AI powered judicial decision-making.

The LeO is also considering "adopting a tiered, ‘polluter pays’ case fee structure" to reduce demand. A stakeholder consultation is promised for summer 2026. One way or another, consumer-facing firms in particular are likely to find themselves absorbing the cost and time demand of an AI-enabled increase in complaints volume and complexity for the foreseeable future.

The LeO has in the meantime published its latest round of "public interest decisions" – example decisions, naming the law firms in question, which will remain available on its site for 12 months.

The Bar Standards Board reported coming under similar pressure in its 2026-27 business plan, "as the volume and  complexity of reports about barristers have  increased. The use of AI is now a contributing factor in driving reports."

***

Meanwhile the SDT published its latest Key Performance Measurements Report, disclosing a meaningful reduction in the number of new proceedings issued by the SRA over the last year. Referrals by private individuals, perhaps reflecting the same trends as those identified by the LeO, more than doubled to 40, although it appears that the overwhelming majority of these fell at the first hurdle.

***

Elsewhere, the judgment in Kamal v Tax Policy Associates represented the first exercise of a statutory power under ECCTA 2023 to dismiss a claim which met the statutory definition of a strategic lawsuit against public participation (SLAPP).

The FCA was ordered to reapply for a search warrant, having made ‘significant errors in law’ as part of a fraud probe into a barrister, including applying under the wrong statutory provision and failing to properly tailor the application to the legal framework used.  However, the High Court said that the FCA had not acted in bad faith and did not order the return of devices seized.

The Legal Services Consumer Panel (LSCP) has questioned whether the Legal Services Board (LSB) is sufficiently resourced and structured to oversee regulation of the sector, and "that the current regulatory framework within which the LSB operates is fragmented, outdated, and structurally incapable of delivering its statutory objectives". The LSCP considers that structural reforms are required to ensure that the regulatory system can meet statutory objectives.

The ACCA has provided feedback on the SRA's consultation on client money in legal services. Whilst the ACCA welcomes the SRA's proposals to tackle non-compliance with requirements relating to accountant's reports, it suggests that responsibility for submitting law firms’ accountant’s reports should remain with the client money-holding law firm, and should not be switched to the accountants.

The SRA issued an update on its Post Office Horizon investigations, indicating that over 20 investigations were in progress, but no action was likely to be taken before publication of the Public Inquiry's final report into the scandal.

The Court of Appeal has reserved judgment in proceedings concerning whether conduct must be "serious, culpable and reprehensible" in order to amount to a breach of the Standards and Regulations. The first instance judgment is here. 

A new regulatory joint taskforce will tackle poor handling of motor finance claims by some claims management companies and law firms, after the FCA, SRA, ICO and Advertising Standards Authority agreed to join up their efforts.

The Bar Standards Board (BSB) has rejected a complaint made against a barrister by the Good Law Project (GLP) on behalf of a trans woman over multiple social media posts. The regulator said the barrister "has the right to manifest her gender critical beliefs”.

***

Noteworthy recent SRA and SDT decisions include:

• A decision dismissing an appeal from an SRA decision to sanction non-compliance with the banking facility rule in SRA Accounts Rule 3.3, including an interesting discussion of the application of the SRA's guidance on financial penalties to licensed bodies (which, unlike 'traditional' law firms, face unlimited (in practical terms) fines for non-compliance), and the ongoing disparity between the approaches of the SRA and SDT to setting fines. Submissions were heard before the SRA's recent decision to sanction a City firm for a breach of Rule 3.3, in which the SRA departed from its own guidance (as discussed in a previous edition).

• A decision to suspend a solicitor following breaches of the SRA Overseas Rules relating (amongst other things) to complaints made to various security and intelligence organisations concerning his own client. The Respondent successfully resisted a costs order on the grounds of impecuniosity.

• A judgment on an Agreed Outcome, in which the respondent solicitor accepted a suspension, having admitted misconduct in connection with attempts to persuade a former client to withdraw complaints to the SRA and Legal Ombudsman.

• A number of allegations of dishonesty were admitted or found proven, leading to striking-off orders for the solicitors in question (and one suspension, on the basis that a one-off act of dishonesty in exceptional circumstances justified a lesser sanction).

• An Agreed Outcome imposing aggregate fines of £3,000 in relation to the improper retention of funds in client account. The Respondent also agreed to a £35,000 contribution to the SRA's costs.

• A former partner of a large international firm was suspended for two years, having admitted telling a client to destroy evidence within scope of a search order.

• The latest in a series of unsuccessful prosecutions related to the Daily Mail undercover investigations into immigration firms.

• Referrals to the SDT for two solicitors concerning apparently unrelated social media posts which are alleged to have invoked antisemitic tropes. The allegations are subject to a Hearing before the Solicitors Disciplinary Tribunal and are as yet unproven.

• The High Court dismissed an appeal from an order of the SDT suspending a solicitor for acting without integrity by issuing proceedings and applications found to be totally without merit and conducting litigation in a manner that drew judicial criticism.