The Solicitors Regulation Authority has put reform of the professional insurance indemnity market on the back-burner, it was confirmed yesterday. SRA chief executive Paul Philip said other issues, including changes to the compensation fund qualifying criteria, had to take priority in a crowded to-do list.
The regulator consulted earlier this year on how to balance the cost of protecting consumers, with proposals for both PII and the compensation fund. It was envisaged that the SRA would have another attempt at reducing the minimum cover from £2m to £500,000, having failed with such a move in 2014.
But speculation has increased in recent weeks, with little progress - or even mention - of any reforms of PII requirements.
Philip, speaking to the media during yesterday’s compliance conference in Birmingham, said the SRA has prioritised the issue of the compensation fund, which needs to be addressed more urgently at this stage.
The regulator is unlikely even to discuss a response to the PII issue until next spring at the earliest, but even then Philip said there is ‘no commitment at the moment to doing anything’.
In March, the SRA argued its plans to reduce minimum cover could help reduce insurance costs for some firms, encourage new businesses to enter the legal sector and lead to lower prices for consumers.
But the policy has alarmed some in the profession, who argue it reduces consumer protection and threatens to derail an already-benign PII solicitors’ market.
The SRA appears more resolved to reform compensation fund rules to protect the profession from ever-increasing costs of covering solicitors’ most serious mistakes. These changes could include reducing claim limits to £500,000, simplifying when the hardship tests apply, and tougher assessment criteria for those making a claim. These are needed, the SRA has said, to keep the scheme ‘viable’ in the face of emerging risks of high-value claims linked to solicitors’ involvement in large-scale dubious investment schemes.