Regulators have rebuked three law firm directors who failed to report the practice was in financial trouble. Martin Pearse, Christopher Lingard and Fiona Higgins were all sanctioned by the SRA following the intervention last year into southwest firm Follett Stock.

The regulator closed the practice last year after it was declared insolvent, with 30 people losing their jobs.

In a statement on its website, the SRA said Pearse, Lingard and Higgins had all failed to comply with regulatory obligations and deal with the regulator in an 'open, timely and co-operative manner'.

They also delayed informing the SRA of serious financial difficulty at Follett Stock and its subsidiary FSHL Limited. The firm was based in Truro, Cornwall and at one time had offices in London, Bristol and Exeter.

The rebuke means the trio will not face any further action in the Solicitors Disciplinary Tribunal.

Last week the SRA emphasized that risks of financial instability and firms collapsing in a disorderly way are still a concern to the regulator. Executive director Crispin Passmore said research has found that, for small and medium firms, the risk of misusing client money is more common if a firm is in financial difficulty and needs propping up.

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