Solicitors’ regulator takes first steps to running its own indemnity scheme to protect consumers
The Solicitors Regulation Authority (SRA) has today taken the first steps towards the establishment of a scheme that should secure long-term consumer protection under their direct management, with the launch of a consultation on the future of the Solicitors Indemnity Fund (SIF) and post six year run-off cover (PSYROC).
Law Society of England and Wales president I. Stephanie Boyce said: “We will thoroughly examine the new proposals, but I can say now we are positive about the way in which the SRA’s position on PSYROC has evolved, and glad they now agree it is necessary to protect the long-term interests of consumers.
“In terms of how the scheme will work, the SRA will take over the existing SIF, rather than establishing a brand new scheme.
“The SRA’s proposed scheme makes provision for the recovery of claims costs from solicitors to the level of the excess in the preceding professional indemnity insurance policy.
“While the same provision is also made under the current SIF rules and does not represent a significant change, the scope for PSYROC recoveries is often very limited and can only be exercised where it is likely to succeed and it is fair in all the circumstances of the claim that the solicitor should pay the excess.
“In practice we would expect this approach also to be applied by the SRA.
“We are pleased the new SRA indemnity scheme mirrors the indemnity cover provided by SIF and that the arrangement is intended to provide protection on terms equivalent to the indemnity insurance provided under the SRA’s minimum terms and conditions.
“We will need to review the new analysis that accompanies the consultation, but we note the SRA is confident they will be able to deliver the same protections as SIF, at a lower cost.
“Bringing the fund in-house will also allow them to monitor claims data, which could enable them to better identify and regulate long-term risks, to the benefit of solicitors and consumers alike.
“We also note it is not anticipated the profession would have to pay a contribution levy to the fund at this time.
“We are optimistic that by continuing to work cooperatively with the SRA we will achieve a positive outcome that will protect both consumers and our members.
“We value the opportunity to assist the regulator in establishing a new arrangement to secure the future of this vital protection on a sustainable basis.”
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