The profession’s oversight regulator has refused plans to reduce the minimum level of PII cover to £500,000.
In a decision notice published today, the Legal Services Board said the current £2m level (£3m for incorporated firms and LLPs) should remain in place for now.
The Solicitors Regulation Authority wanted to reduce the minimum, which it said would help smaller firms and create more flexibility in the market.
But after first applying for 90 days to make a decision, the LSB has opted simply to impose a new requirement of firms to assess and purchase an ‘appropriate level of professional indemnity insurance’.
It is understood the LSB did not feel the SRA had shown enough evidence of the benefits of such a change – but the option is still open to make another application in the future.
LSB chief executive Chris Kenny (pictured) said: ‘What matters is that firms have the right incentives to assess their risks accurately and so ensure that consumers are protected.
‘It is not clear to the board that a minimum level of cover necessarily has a place in achieving that and we were certainly not persuaded by the evidence put forward for the figures proposed.’
The plans had been roundly criticised by the Law Society, Legal Services Consumer Panel and mortgage lenders.
SRA chief executive Paul Philip said the decision was ‘disappointing’ but declined to comment further until the correspondence was considered.
Law Society president, Andrew Caplen, said the decision was good news for consumers and firms.
‘If implemented, the changes would almost certainly have increased risks to consumers and costs for firms. That amount of cover would be insufficient for the vast majority of firms and would be unlikely to result in any significant lowering of premiums.’