COMPENSATION FUND: Law Society Council votes against SRA's preferred charge

Solicitors will pay £150 into the compensation fund this year after the Law Society council voted against imposing the £300 charge recommended by the Solicitors Regulation Authority (SRA). The vast majority (85%) of council members voted for the lower charge, which the SRA said would still allow it to compensate members of the public who had suffered a loss as a result of a solicitor's dishonesty. However, Antony Townsend, chief executive of the SRA, told the Gazette that setting the charge at the lower rate might make it impossible for the regulator to stop contribution rates fluctuating ahead of an expected hike in claims as the economy slows down. In the past, rates have soared by as much as 900% from one year to the next. He said: 'There are two key principles. One is public protection - making sure there is enough in the fund to make sure that clients are not short-changed - and both figures [£150 and £300] meet that. 'The second is more contentious - do you keep quite a high level of reserve as a buffer to keep rates from going up and down as they have done so before? That's smoothing contributions and the council is saying to the SRA board that is too cautious.'

Townsend also said charging £300 would have enabled the SRA to reach its target reserve fund figure of £27 million over the next four years. Only solicitors who hold client money and have held a practising certificate for seven or more years will be charged the full rate. A series of reduced charges will apply for those who do not hold client money and/or have held a practising certificate for fewer years. The charge will be collected along with practising certificate fees at the end of October.

Council members queried how the SRA had arrived at both figures and asked it to provide 'more transparent' figures and methodology in the near future. Townsend confirmed the SRA was currently reviewing fund contributions and would be reporting back to the council in the summer.