So-called ‘regulator shopping’ should be encouraged so long as it does not compromise client protection, the Law Society has said.
Responding to a consultation by the Solicitors Regulation Authority, the Society said it supported any attempt take away unnecessary blocks to legal services providers switching regulators.
The SRA wants to remove the requirement for firms to have professional indemnity insurance run-off cover in place when they switch to another regulator. Under the proposals, the switching firm would not be obliged to have the equivalent minimum terms and conditions cover under the new regulator.
Law Society chief executive Catherine Dixon said removing red tape would be welcomed, but not at a risk to consumers.
‘We are concerned that the SRA’s proposals could leave existing and past clients of firms that switch regulator without appropriate cover,’ said Dixon.
‘We urge the SRA to ensure that firms would only be able to switch regulator without triggering run-off if they have PII equivalent to the SRA’s minimum terms and conditions for six years to cover claims arising from matters concluded before the switch.’
The Society said the SRA’s consultation paper lacks detail on how the proposed arrangements would work in practice, including the considerations that the SRA would take into account when determining whether to grant a waiver to a firm intending to switch regulator.
Meanwhile, the Legal Services Board has published the findings of its review of restrictions on choice of insurer.
The report concluded that PII is costly but historic restraints on the choice of insurance provider are gradually being removed. Commercial insurers view their target market as law providers generally, rather than solicitors, conveyancers or barristers.