How far do we trust solicitors to do the right thing?
That’s essentially what the SRA is asking itself in seeking to slash the minimum insurance cover requirement from £2m to £500,000.
Can the regulator loosen the reins? Does it have to nanny the legal profession or should it set a low minimum and let professionals decide what cover they need?
The theory is this: high minima mean firms’ insurance costs go through the roof and the burden is shouldered by clients.
Stretch the insurance too high – shine up that gold plate a little too much – and you ultimately drive clients into the arms of providers with prices low enough for them not to worry so much about whether they are protected.
The SRA does not believe that, just by offering firms the chance to take out cover for as little as £500,000, firms will automatically take that option.
The regulator wants to leave it in their hands and trust they do the right thing. The vast majority will, a fact borne out by the relatively tiny number of claims made against solicitors.
I understand the argument that creating such a consumer protection utopia is pointless if there are no consumers left who can afford it.
But the SRA has to be careful what messages are being sent out here. People use solicitors because they have that assurance they will be looked after in the event something going badly wrong.
Reducing the minimum cover, as well as limiting the amount that will be paid out by the compensation fund, chisels away at the fundamentals that make the profession so attractive - and trusted.
Taking away redress (or being seen to take away redress) could strip solicitors of their USP and leave them no better in the eyes of the public than unregulated providers.
The SRA has a duty to be proportionate in its rules, but it also has a duty to the public. Affordability of legal services is a major barrier for consumers, of course - but don’t underestimate the lure of the reassurance that rules can provide.