The Law Society’s Council convenes next week to set the level of the compensation fund levy, with a steep increase on this year’s £150 now seemingly inevitable. A report circulated ahead of Wednesday’s meeting contains a recommendation from the Financial Protection Committee that the full contribution rate for 2009/10 be set at £450.
A final decision on the levy was deferred last month pending further consultation with the Solicitors Regulation Authority. Council will hear that £270 is the lowest level the regulator would support, as claims soar and calls on fund reserves increase. The higher figure of £450 allows for a degree of ‘smoothing’ which the committee hopes would mitigate the need for high contributions in 2010/11. Projections have shown that solicitors could face another steep increase then, as the number of practice interventions and the incidence of mortgage fraud increase.
‘We are starting to see the consequences of an economic downturn of unprecedented severity,’ the report says. ‘It could have consequences even worse than the early 1990s, when grants peaked at £42.3m in today’s values.’