We are a small firm with two partners and no staff, and a turnover of less than £200,000.
We are currently carrying out our renewal of Solicitors Regulation Authority registration and have come to the fees. We understand that a periodical fee has to be paid. However, we take great exception to the fee for the compensation fund for holding client money.
In the last year we had 12 entries averaging out (based on our calculations) at £1,485. We have been asked to pay £778 as a contribution to the compensation fund. Our client account has been essentially dormant since the end of July 2017, holding a nominal sum based on interest paid by the bank, totalling £7.74. We are expecting turnover through this account to be reduced substantially in the coming year.
In conversation with an SRA customer adviser, we have been informed that we will still have to pay into the fund at whatever rate the SRA sets for next year, regardless of the amount the account holds.
So, if it continues to hold £7.74 the charge for this ‘risk’, based on today’s figures, will be £778. We have also had to pay an accountant £1,200 in the last year to prepare a report to tell us that we are in full compliance with SRA rules and do not need to report ourselves to the regulator.
A few thoughts run through our head on the proportionality of the fee set against the risk that the compensation fund was set up to cover. In the five years that this firm has been operating, we have never had a hint of a complaint and, of course, carry £3m of professional indemnity insurance in case of such an event.
We would therefore be grateful if the SRA could try and explain to us why a small firm like ours is discriminated against in this way through a flat fee for all firms, regardless of client account turnover, rather than a fee being based on turnover – that is to say, ‘risk’.
Paul Hopkinson, partner, PL Law, Newcastle upon Tyne