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Consumer protection high price to pay for increased competition
Reducing consumer protection standards in legal services would hurt solicitors and clients alike, the Law Society of England and Wales said in response to proposals to slash levels of mandatory professional indemnity insurance (PII) cover for solicitors.
The Solicitors Regulation Authority (SRA) proposes reducing minimum indemnity cover from the current level of £2-3m, to between half a million and one million pounds. Access to the Solicitors Compensation Fund would also be restricted and maximum payments reduced from £2m to £500,000.
“These proposals to reduce client protection are utterly misguided,” Law Society vice president Christina Blacklaws said.
“It’s important that the insurance standards are reviewed, but we need to get the balance right between protecting consumers, protecting solicitors and promoting a competitive insurance industry.
“Premiums already reflect levels of risk in the work a firm undertakes, and cost is front-loaded into the first £500,000 of cover, so the idea that the current system is unfairly ‘one size fits all’ is nonsense.
“Solicitors and their clients are protected by gold standard insurance, which is appropriate given the gravity of many of the issues we deal with.”
The SRA has provided no evidence to show their proposals will result in lower costs for solicitors or their clients.
Christina Blacklaws continued: “Brokers have told the Law Society these proposals are unlikely to result in lower premiums, so it’s hard to see how clients could possibly benefit from any savings being passed on, but it’s easy to see how they might suffer.
“It's baffling that the SRA is proposing further demolition of client protections, on top of that already on the table if proposals to allow solicitors to advise clients without the security of a law firm go ahead.
“No other profession in the UK offers their clients such comprehensive or robust protection and this is one of the distinctions that underpin public trust in the legal sector, and solicitors in particular. Let’s keep it that way.”
Notes to editors
1) Firms have a continuing obligation to ensure they have qualifying insurance in place at all times or face closure within 30 days of expiry of the last policy.
2) The Law Society provides comprehensive advice to its members on scam prevention and cybersecurity. We also provide information for firms which covers:
- handling client money
- verifying bank account details
- risks associated with email, telephone calls and use of wifi
- security policies and training
- technical preventative measures
- reporting scams.
The Society's webpage on cybersecurity provides advice on how to avoid attacks and offers free online training. We sponsor firms to join Cyber-security Information Sharing Partnership (CiSP) - a free initiative for sharing cyberthreat and vulnerability information.
3) The SRA has announced that there will be no extension beyond 30 September 2020 to arrangements insurance cover for closed firms beyond the current six-year run-off period provided by the Solicitors Indemnity Fund (SIF). Any practice that has shut since September 2000 without a successor currently taking on its liability benefits from additional PII cover from SIF for any claim made after its compulsory six-year run-off has ended. In 2014, the SRA proposed to reduce compulsory run-off cover from six years to three, a proposal that the Society opposed as harmful to the profession, its clients and to the trust of the public in the profession.
About the Law Society
The Law Society is the independent professional body that works globally to support and represent solicitors, promoting the highest professional standards, the public interest and the rule of law.
Press office contact: Harriet Beaumont | email@example.com | 020 8049 3854