The Law Society has called on solicitors to respond to a clutch of SRA consultations on reforms that Chancery Lane warns will damage both the profession and clients.
Former president Linda Lee (pictured) has written to local law societies and practitioner groups highlighting the fact that the SRA allowed only six weeks for responses to reform proposals on: professional indemnity insurance (PII); eligibility for grants from the Compensation Fund; accountants’ reports; and multidisciplinary practices.
The closing date for responses is 18 June, with most of the changes set to take effect from October.
Lee, chair of the Society’s Regulatory Affairs Board, writes that the plans will have an ‘adverse impact’ on the profession for several reasons. These include the fact that smaller firms doing conveyancing and other high street work will find themselves less well protected and may still be required to purchase PII at a higher level.
‘Without the benefit of block purchasing, such cover will be more expensive than if purchased as minimum cover at an affordable price or at all,’ she says. ‘Many such firms may find themselves out of the conveyancing market altogether because lenders will regard the new protection as inadequate.’
Lee also warns that:
- Larger firms are likely to find ABS competitors subject to less regulatory scrutiny and with no level playing field;
- Consumers will face confusion and a significant reduction of the protections available; and
- The cost of insurance failure will be a cost to the profession as a whole and the reputation of the profession will suffer.
She adds: ‘It should be noted that the SRA has not researched nor put forward any evidence in respect of any benefit claimed [from the reforms].’
The Law Society also expresses concerns about the SRA’s plans to change reporting accounting requirements.
The regulator has proposed to remove the mandatory requirement on firms to submit an annual accountant’s report, instead asking compliance officers to sign a declaration they are satisfied that the firm is managing client accounts properly.
The SRA says it will save costs both to itself and the firms, but the Society says COFAs will be unwilling to sign the declaration without the benefit of an accountant’s report.
The representative body also suggests that independent review of the accounts could be said to act as a deterrent and also to guard against disorganised practices, while the SRA will lose a valuable source of intelligence of serious failings.