Practitioners are paying significantly more this year to shoulder rising compensation fund payments, the Solicitors Regulation Authority has confirmed. 

The levy on firms in 2017/18 is £778 - an increase of 42% compared with the previous year and the highest cost since 2013/14. Individual levies are up by 25% to £40. 

The increases follow a year in which the SRA paid out £15.2m to members of the public and businesses suffering financial loss as a result of a solicitor’s or firm’s dishonesty or failure to return client money. 

Around £4m was paid for house deposits, while £3m was allocated for replacing people’s stolen inheritance. The largest single payment was for more than £500,000, after a solicitor took a client’s house deposit and mortgage advance. 

The increased levies are partly due to the growing threat of solicitors’ involvement in questionable investment schemes and the rising number of interventions into firms. The number of interventions - when the SRA takes over a firm’s client files and money – rose to 50 from 37 the previous year,

Clients and businesses made 2,174 claims against the fund in 2016/17 and 680 claims led to a payment, with an average £22,000 paid out. While the £15.2m cost is a 47% increase year-on-year, it is still low in comparison with previous years, in particular in 2013/14 when £23.6m was paid out in total. 

The SRA was able to recover £5.5m in costs in the year, through pursuing the intervened solicitors or managers, insurers and, in certain circumstances, former partners and directors. 

SRA board chair Enid Rowland said the regulator will respond to risks in the sector to reduce costs to the fund.  ‘In the past year, we have issued two warning notices about the growing threat of solicitor involvement in dubious investment schemes, which have cost the public more than £100m,’ she said. ’The very few firms involved risk harming the confidence people place in the profession, so we take robust action.’