News release
SRA consults on strengthened notification requirements to help identify risk earlier
19 June 2026
- We have launched a consultation on collecting different and more timely information from firms to help spot and target risks earlier.
- Proposed new rule will introduce prescribed events that firms must notify us about.
- Firms will have to notify us about planned mergers and acquisitions, as well as when they start holding client money.
- These proposals are part of our wider reforms that focus on client money arrangements.
We have launched a consultation on further reforms intended to strengthen the protection of client money and enable earlier identification and action on risk. The changes are designed to reduce the likelihood of consumer harm, while maintaining public confidence in legal services.
The consultation considers whether new regulatory requirements should be introduced to require law firms to notify us of prescribed events. The consultation focuses on points where changes to a firm's profile might indicate the potential of a higher risk of harm to the interests of their clients.
Under the proposed changes, law firms would be required to notify us when they start holding or receiving client money, or merge with or acquire, other firms.
Aileen Armstrong, Executive Director – Strategy and Policy, said: 'Our focus is on gaining earlier visibility of potential risk. Having the right information at the right time is important to help us to proactively identify risks earlier and, if necessary, act on them to prevent harm, including the loss of client money.
'The proposed new notification requirements will help set the foundation for this. We are initially targeting two areas where stakeholders agree there should be greater visibility of changes in real time: law firms acquiring other firms and firms starting to hold client money. We urge stakeholders to engage with us on our proposals for achieving this.'
This consultation follows an announcement earlier this month on new rules requiring all firms holding client money to submit accountants reports to us. This was alongside new rules to make sure that individuals who can make significant decisions about how the firm is run cannot also be the compliance officers for legal practice and finance and administration.
Recent high-profile cases, including PM Law and Axiom Ince, have reinforced the importance of identifying emerging patterns in mergers and acquisition activity across the market and gaining earlier visibility of developments within firms that might present risks.
These proposed changes also form part of a wider programme of work moving towards a more intelligence-led model, involving proactive risk identification and a focus on the big issues for 2026, which will also continue into next year. As outlined in our draft 2026/27 business plan, we recognise the need to consider whether the current model for firms holding client money continues to provide the right protections for the long term. We will also consider whether senior individuals in firms should have clearer personal responsibility for protecting client money and managing risks.
The consultation is now open and will run until 17 August 2026.