Fraud pay-out fears

COST OF DEFAULT: contributions to the SCF could rise steeply

Contributions to the Solicitors Compensation Fund (SCF) are set to more than double - in spite of the fund having had one of its most successful years on record.The Law Society's Council will this week consider proposals to increase contributions from 100 a year for solicitors of seven or more years qualification - the level of the past three years - to 250.The contribution for four to six years qualified solicitors should rise from 50 to 100, the annual cost of default report says.

Solicitors three years qualified and under are exempt.The SCF, which compensates the victims of dishonest and fraudulent solicitors, paid out 7.5 million last year, the lowest payout for 11 years, leaving a balance of 50 million in the fund.However, the number of Office for the Supervision of Solicitors (OSS) interventions which were attributable to dishonesty - as opposed to straightforward accounts rules irregularities - increased by 5%.Consultant auditors Bacon & Woodrow recommended the rise in contributions following two claims totalling 15 million which were commenced this year and could result in large payouts.The two cases involve investment scam cases that could result in payouts having to be made to the duped clients.In addition, the OSS has a backlog of 450 unstarted forensic enquiries, compared with 300 last year.Steve James, the head of the monitoring and investigation unit at the OSS, said: 'As the profession gets more profitable and wealthy, the types of offence committed are done less through desperation than greed.'

Jeremy Fleming