Solicitors' regulator appears to be moving in the right direction on long-term consumer protections
The Law Society of England and Wales has today responded to a Solicitors Regulation Authority (SRA) discussion paper on the future of the Solicitors Indemnity Fund (SIF), outlining three key principles for consumer protection in relation to negligence claims brought more than six years after a firm has closed.
Law Society president I. Stephanie Boyce said: “We welcome the evolution of the SRA’s position on this important consumer protection matter and appreciate the opportunity they have provided for us to feed into the next stage of their policy development on post six-year run-off cover (PSYROC).
“The Law Society, alongside other stakeholders, argued strongly against the closure of SIF, but our main focus has always been ensuring the continuation of PSYROC and the full range of protections that it provides.
“We are pleased to see the SRA recognises that there is still a need for this type of cover to ensure consumers are protected.
“In principle, we could support an SRA-run consumer protection fund, but only if it provided the same like-for-like protection as SIF.
“Indeed, if SIF were to be replaced with a consumer protection fund, we would want the new arrangement to meet three key principles.
“First, any new arrangement should continue to run as an indemnity scheme, which could be funded on an ongoing basis through a mandatory levy on firms.
“Expert analysis carried out on behalf of the SRA suggests that this should cost around £240 per firm per year, which need not have any effect on the price of legal services for consumers.
“Second, any residual funds from SIF should be ring-fenced for the specific purpose of dealing with PSYROC claims, for the benefit of consumers and solicitors.
“Third, any new arrangement should provide the same scope of indemnity cover that is currently provided by SIF.
“People go to solicitors for support and advice during significant events in their lives – the death or injury of a loved one, family breakdown, a house purchase or estate planning.
“They do so rightly confident that solicitors are highly qualified and regulated. Consumers trust their solicitor is adequately and appropriately insured, and that they will be compensated for any losses on the rare occasion something goes wrong. It is of paramount importance that trust and confidence are maintained.”
Commenting on the evolution of PSYROC policy, I. Stephanie Boyce added: “We want to reassure the profession that the SRA’s discussion paper should not be regarded as a substitute for a consultation. This was the regulator going out of its way to seek the opinions of interested parties before making any decisions about the content of their next formal consultation on this issue.
“The Law Society is grateful to have had the opportunity to contribute our views at this stage, and we welcome the regulator’s collaborative approach.
“The extension under which the SIF is still providing PSYROC runs until the end of September 2023, and the Law Society has requested a timetable from the SRA setting out how it expects this matter to progress to ensure appropriate protections will be in place, come the beginning of October next year.
“We look forward to working constructively with the SRA on the future of this important consumer protection.”
Notes to editors
- Law Society response to the SRA discussion paper on post six-year options
- * Our reasoning for preferring a per-firm contribution was explained in detail in our response to the SRA's consultation on the future of PSYROC and SIF, paragraphs 100 to 107.
- Read the SRA’s discussion paper on post six-year run off cover and the future of SIF
- Find out more about the closure of SIF
- Read the SRA’s information on SIF
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