The oversight regulator has given itself an extra two months to decide on reducing the minimum required cover for professional indemnity insurance after strong opposition from the Law Society and other organisations.
The Legal Services Board received an application from the Solicitors Regulation Authority on 15 July to reduce minimum cover to £500,000.
The LSB had an initial 28-day period to assess the proposals, but the organisation has now extended that deadline to 90 days – ending on 12 October – to make a decision.
If it takes that long to decide, it will effectively put the brakes on the SRA’s wish to implement the reform in time for this year’s renewal period, as most firms will have renewed by 1 October.
Crispin Passmore (pictured), SRA executive director for policy, said: ‘The LSB has always had the option of extending its assessment periods and often does so: this is not an unusual move. We made clear in our application to the LSB that a positive decision by the end of August would allow the rules to come into force in time for the 1 October 2014.
‘If the LSB does not make a decision in time, or does not approve the rule changes, then the current rules remain in place for those policies that need to be renewed on 1 October.’
A spokesman for the LSB said the issue had been too complex to decide within 28 days, but there is no guarantee the board will use the full 90 days.
The uncertainty will do little to please firms waiting to hear what their minimum terms will be this year, though the prospect of delaying the reform will please groups that have opposed it.
The Law Society, the Legal Services Consumer Panel, Council of Mortgage Lenders and Association of British Insurers have all written to the LSB urging it to reject the SRA’s proposal.
Law Society president Andrew Caplen said he was 'very pleased' that the LSB is taking more time to examine the proposals. However it would be 'much more preferable for the SRA to withdraw this application and consider the wider question of the profession’s compensation arrangements in the context of its recent call for evidence,' he said.
'We are aware that the SRA still considers that there may be time to implement the proposals for this insurance round. The Society’s view is that, for practical purposes, this cannot be the case.
'It will be important for the profession to know the latest date that the SRA considers that the approval must be given to ensure that market chaos does not occur. Our strong recommendation to solicitors is that they should make their arrangements for PII for October 2014 as soon as practicable.'