The proposals in the SRA’s consultation paper risk opening up new areas of considerable consumer harm. In return they offer aspirational benefits that are unlikely to be delivered.
Professional Indemnity Insurance (PII) is a significant expense for solicitors. Therefore, if there were ways to reduce that cost, in ways that enhanced, rather than undermined, the regulatory objectives, we would be supportive. Where possible, we have flagged areas where changes could be made without disproportionate damage to the regulatory objectives. These include the rules around run-off cover and certain proposals regarding the Compensation Fund.
However, taken as a whole, it is highly unlikely that most of these proposed changes will enhance the regulatory objectives. In particular, we do not accept that these changes are likely to boost competition or improve access to justice. The principles of the public interest and rule of law demand professional standards and trust in the profession of solicitors. These in turn demand that protections should be in place to guard against negligent failures by regulated persons. Having clear and uniform protections provides people with reassurance.
Fundamentally, insurance protection is an important part of regulation as it is a post-purchase safeguard rather than pre-purchase, providing indemnity that clients can rely on when other regulatory safeguards have failed. Insurance should not be used, therefore, as a mechanism to promote any market or inhibit any aspect of practice.
Our analysis is that these proposals are likely to undermine the following regulatory objectives:
- protecting and promoting the public interest;
- protecting and promoting the interests of consumers; and
- promoting and maintaining adherence to the professional principles.
We particularly wish to highlight concerns about the quality of the data and analysis that underpins the SRA’s conclusions. We believe the evidence is unclear, insufficient, and incomplete.
We also produced a slide deck to assist members who might be interested in making their own submissions, but who don’t necessarily have time to read the whole consultation document or our response. It focuses on the SRA’s main proposals and our objections to them.
If you want to respond - and we would encourage you to do so - the deadline for submissions is Friday 15 June 2018.