SRA Compensation Fund
This levy is currently split between:
- regulated individuals, who pay a flat fee
- firms holding client money, which pay a larger flat fee
Purpose of the fund
The fund provides compensation to people who are owed money by a regulated law firm. It helps:
- provide a safety net for risks that professional indemnity insurance (PII) is unable to cover
- people who have suffered loss due to a solicitor’s personal dishonesty
- people who have experienced hardship due to a solicitor's failure to account for money they’ve received
- reinforce the public’s trust in the legal profession
You can find a more detailed explanation in part two of the SRA Compensation Fund Rules 2021.
Who can claim
The fund is discretionary. The SRA decides whether someone is eligible to make a claim.
A claimant does not have to be a client or a former client of the solicitor or firm who owes them money.
However, they must be:
- an individual
- a business, company or association with a turnover of less than £2 million
- a charity with an annual income of less than £2 million (unless it can show that the beneficiaries will suffer hardship)
- a trustee of a trust with an asset value of less than £2 million (unless they can show that the beneficiaries will suffer hardship)
The claimant must be able to show they’ve suffered:
- loss because of the regulated person or firm's dishonesty – including theft and misappropriation of funds
- loss and hardship due to the regulated person or firm's failure to complete work for which they have been paid
Maximum amount that can be claimed
The maximum payment limit for any one application is £2 million.
However, larger grants can be made in exceptional circumstances (as set out in rule 9 of the SRA Compensation Fund Rules).
Where multiple applications are made in relation to the same or connected underlying circumstances, the SRA can cap grant payments for those applications at a total of £5 million (as set out in rule 10 of the SRA Compensation Fund Rules).