The SRA today proposed to place a cap on the amounts solicitors can charge for running financial mis-selling claims. The new limits largely replicate the existing bandings used by the Financial Conduct Authority and have been drawn up in response to concerns about excessive charges being levied against clients.
Under the proposals, solicitors would be able to charge no more than £10,000 for claims worth more than £50,000. Costs are limited to £7,500 for claims between £25,000 and £50,000 and go down incrementally to £420 for all claims worth less than £1,500.
The plans are subject to consultation, but the SRA says that firms involved in this work have ‘broadly welcomed’ the idea and will still be able to operate profitably and remain viable under the new costs limits.
Paul Philip, SRA chief executive, said: ‘This is important for both consumers and the firms we regulate. Fees for claims management work related to financial products or services have to be set at a level that means the cost is affordable for people seeking redress, while ensuring that it is still a viable area of work for firms that provide this service for those who need it.
‘So although the number of law firms involved is small, the impacts for consumers could be significant.’
The SRA has met with firms, consumers and other stakeholder groups since publishing a discussion paper on charges for mis-selling claims in 2021.
According to the regulator, the resulting proposals will improve clarity and certainty for consumers and put in place consistent, sector-wide parameters to prevent over-charging.
Consumer groups are said to be ‘enthusiastic’ about potential new protections for members of the public and welcomed any new rules requiring clear information to be provided about the options available to claimants.
Focus groups commissioned by the SRA heard from people who had chosen to be represented by a solicitor during their financial service claim, usually for mis-sold pension schemes and investments The SRA said their accounts demonstrated ‘specific areas of complexity and positive experiences of their solicitor’s approach and representation’.
The consultation is open until 21 June.
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