The Solicitors Regulation Authority has refused to water down its planned reforms of professional indemnity arrangements despite having to shelve plans for this year.
The regulator had wanted to cut the minimum cover limit to £500,000 in time for this year’s renewal date, but this was effectively scuppered when the Legal Services Board requested more time to approve the decision. It is likely to be forthcoming by mid-October.
SRA chief executive Paul Philip (pictured) yesterday reiterated that his organisation had responded to calls for reform of legal services regulation and said the pace of change was too slow.
The oversight regulator has suggested the SRA consider one part of the application, simply asking firms to commit to securing a suitable level of cover. This would keep in place the current £2m mandatory limit, with a waiver available for firms needing less cover.
But in a letter to the super-regulator sent last week, Philip insisted the reforms were part of one package and should be introduced together.
Philip said: ‘[Approving the plans in part] would be an increase in regulation but without necessarily improving consumer protection and would inevitably push costs up for some firms, without the benefits of potentially lower cover that would apply to others.’
Philip said the SRA was responding directly to the LSB’s assessment in February 2013 that solicitors were subject to too many rules without any clear evidence of them being justified.
He cited the LSB’s own guidance, which called on legal services regulators to find ways to reduce barriers and restrictions on providers.
‘The proposals are consistent with such an approach because the primary objective in changing our regulatory arrangements is to move from an arbitrary level of protection, which in many cases is unnecessarily burdensome, to one which is both targeted and proportionate,’ Philip said.
He added that the SRA found it ‘hard to understand’ the LSB’s recent suggestion that reduced cover could harm consumers.
Rather, he said, the current level of cover was an ‘arbitrary, general level’ set many years ago which offered no extra consumer protection and caused extra burden for law firms. ‘It has been overtaken by developments in the current legal market and there is no convincing evidence that it is appropriate,’ he added.
The SRA decided in July to press ahead with reform of PII terms and conditions, despite meeting with opposition from insurers, mortgage brokers and the Law Society.