The fund protecting retired solicitors from historical claims has been reprieved once again by the Solicitors Regulation Authority.
The regulator announced today that it would seek a further 12-month extension of the Solicitors Indemnity Fund (SIF) until at least September 2023.
This is the third consecutive year that the SRA has opted to extend the scheme, which acts as a safety net for non-practising solicitors who no longer have run-off insurance cover.
The decision follows a backlash from the legal profession when the issue was put to consultation at the turn of this year. More than 330 formal responses were submitted, with the majority opposing the SRA’s preferred option of ending the requirement for post six-year run-off cover.
Respondents said the potential impact on individual consumers could be significant if no protections were in place, while the cost of funding any future arrangements would be ‘minimal’ from the profession’s perspective.
The SRA had wanted to leave the provision of cover post-closure to the open market. But with little appetite for the risk among insurers, this has been ruled out. In a statement, the regulator said it retained ‘serious concerns’ that the current costs of running the SIF are higher than they should be for the benefit delivered and further work will be done to scope out an alternative.
Anna Bradley, SRA chair, said: ‘The level and depth of feedback has been hugely helpful in giving us evidence to move our thinking forward. There was widespread agreement that providing appropriate consumer protection was key, but there is clearly still room for debate about how this might be delivered.
‘We want to work closely with stakeholders, including particularly the Law Society, to build on the constructive ideas we heard from the consultation, and explore credible, value-for-money options that could provide efficient and effective consumer protection. We can then make a decision on the long-term position.’
The SRA board has yet to make a decision on the future of post six-year run-off cover and is likely to consult again later this year after further research.
The Law Society, which lobbied to defer the closure, said today it was delighted by the reprieve. Society president I. Stephanie Boyce said: ‘Possible alternatives to SIF include making changes to how the fund is set up and operated, reducing the scope of protection it gives, or finding a different consumer protection vehicle funded via SIF’s surplus – which may also be subsidised by the profession.
‘We are pleased the SRA has heard our arguments about the importance of continuing consumer protection, rather than run the risks of not doing so, which would leave consumers unable to claim compensation for flawed transactions affecting wills, buying a home or child personal injury cases.’
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