UK: SRA Launches Consultation on Third-Party Litigation Funding

The Solicitors Regulation Authority for England and Wales (SRA) has opened a consultation (9 July to 17 September 2026), on new rules for firms that use or arrange third-party litigation funding for consumer claims. This follows firm collapses, including SSB Group Limited which owed over £200 million to litigation funders. The SRA highlights that firms take on debt-funded models without managing the risk, failing to stay independent of funders or flag conflicts of interest, giving clients unclear information on funding costs, and skipping due diligence to check funds are not criminal property or sanctions-linked. The proposed requirements, to be added to the SRA Standards and Regulations, include conduct rules on independence, acting in clients’ best interests, consent before sharing confidential information, and written confirmation of this (applying to all third-party funded work, not only consumer claims); a mandatory funding information document before clients sign; a duty to notify the SRA when funding is used or arranged; a funder risk assessment, reviewed every six months; and, for larger or more exposed firms, an orderly closure plan. The proposals also draw on the Civil Justice Council’s June 2025 final report on litigation funding, which recommended replacing the current self-regulatory regime with formal, light-touch statutory regulation, minimum safeguards for funders (including capital adequacy requirements, anti-money laundering checks and disclosure of funder identity), and stricter protections specifically for consumer and class-action funding. The SRA would welcome such regulation, suggesting that the incentives driving harm in this market will not change otherwise.

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