The Solicitors Regulation Authority is proposing to ease law firms’ insurance obligations should they wish to change regulators.
The regulator today announced that it is consulting on making a change to its Participating Insurers Agreement (PIA) that would ‘make it easier’ for firms to switch regulators and ‘improve competition in the market’.
The SRA would waive a firm’s obligation to obtain six years’ run-off cover for its professional indemnity insurance if the firm moves to another legal services regulator. However, PIA would still require run-off cover to be in place.
SRA executive director for policy Crispin Passmore (pictured) said: ‘Legal businesses are increasingly owned by, and employ, a range of lawyers and non-lawyers, so choosing a regulator is an important business decision.’
Passmore said the regulator had to be ‘careful’ that ‘removing unnecessary bureaucratic obstacles for firms does not create potential risks for the clients of firms wanting to switch.
‘We want to get the right balance between encouraging a competitive market and ensuring the interests of those using legal services continue to be protected, so we are keen to hear views on how best to do this.’
The regulator says waivers can be given only if firms are switching regulator, rather than ceasing to practise entirely.
‘Other regulators have their own indemnity insurance requirements,’ the SRA said in today’s announcement. ‘If changes to the agreement were made, firms would still need to negotiate with their insurer to change the conditions of their policy.’
The SRA added that the consultation ‘is not tied in’ with the ‘more substantive’ consultation on PII planned for later this year.
The consultation closes on 14 July.