SRA’s £6m pledge could save compensation fund | New

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The Law Society has welcomed the regulator’s decision to secure the liabilities of the Solicitors Indemnity Fund – a move that practitioners say could allow the threatened fund to continue indefinitely.

The fund, set up to respond to claims by lawyers after their six-year liquidation cover expired, has been under threat since 2013 when the Solicitors Regulation Authority decided to shut it down. The Law Society and the Sole Practitioners Group have campaigned vigorously for its preservation.

Minutes of the last SRA board meeting, published this week, reveal that the SRA agreed to meet the fund’s request to make commitments of up to £6m in the year to from September. The Board agreed that the SRA would now “provide the necessary commitment to [the fund] and submit the necessary request to the Legal Services Board for the further 12-month extension,” the minutes read.

Lymington’s only practitioner, Clive Sutton, who has investigated the SIF issue for the Sole Practitioners Group, said the £6million ‘would be almost exactly the formula that would be offered by those who want SIF to continue’ .

“The perceived excessive costs of SIF are created by the need to provide sufficient cover and reserves for what is effectively a closed fund at this time,” he told the Gazette. “However, if the fund is covered by the SRA benefit, and through the SRA, the profession, those costs come down significantly, making the cost of cover much more proportionate.

“There would therefore appear to be an easy answer to this problem – to place the indemnity under a formal structure with appropriate administration to continue the scheme into the future.”

Sutton added: “The professional accounting advice obtained by the SPG, which has not yet been contradicted by the SRA, is that there is sufficient income from the funds currently held, for the fund to be self-sufficient if it works on this basis.”

The Law Society said: ‘We welcome the SRA’s acknowledgment of its liability for indemnification agreements that protect users of legal services and address consumer harm. We also welcome the SRA’s decision to further extend the lawyers’ compensation fund and underwrite it until the end of September 2023. This is a responsible course of action as the regulator considers options to ensure continued consumer protection in a proportionate manner.

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