Taking over the scheme to protect retired solicitors from negligence claims will require neither extra staff nor an immediate levy on the profession, the Solicitors Regulation Authority has said. It was announcing agreement on the final rules for maintaining the Solicitors Indemnity Fund (SIF), which protects retired practitioners from claims once their six-year run-off cover has elapsed. 

The SRA's takeover of SIF in October should draw a line under a decade of uncertainty about the scheme, which was set up as an interim measure in 2000. The SRA originally announced closure plans in 2013 but, after a wave of protests initially led by sole practitioners, conceded that the fund was both necessary and sustainable. From October post six-year protection will be part of the SRA’s regulatory arrangements, with 'appropriate oversight and governance'. 

A consultation on draft new rules for the scheme 'strongly supported the principle of providing ongoing consumer protection for post six-year negligence', the SRA said, 'although respondents had a range of views on the detail of the scheme'. Based on this feedback the SRA said it has made some changes to its original proposals, including ensuring that when an arbitrator is required it is appointed by 'an appropriate independent body'.

anna bradley

Bradley: Bringing scheme in-house 'will allow us to collect and analyse data we need'

Source: SRA

The SRA confirmed yesterday that it does not expect to levy the profession to obtain more funds for the scheme in the near future. 'It might, though, at a later date need to consult on options for the fund’s long term financial arrangements.'

In a briefing to journalists, SRA board members said yesterday that they were confident that the new arrangements would cut the SIF's running costs. The SRA will need ‘probably no’ extra in-house staff to run the scheme, chief executive Paul Philip said. An external partner will be procured by October to carry out specialist claims-handling tasks. This is an apparent concession to the concerns of five local law societies, which last year questioned whether the SRA had the expertise to run SIF. 

It emerged at the briefing that one reason for bringing the scheme in-house from its current operator, Solicitors Indemnity Fund Limited, is to improve the quality of management data, SRA chair Anna Bradley said. 'It will allow us to collect and analyse the data we need.'  For 'a variety of reasons', data on historic claims was not available from SIF Ltd, she said. 

The draft rules will now go before the Legal Services Board for approval. 

Law Society president Lubna Shuja said: 'We are delighted that the SRA board has decided to continue to provide consumers with the vital protections of the SIF.

“This means clients can trust that their solicitor is adequately and appropriately insured, meaning they can be compensated in the unlikely event that a claim is identified beyond the usual six-year term of solicitors’ professional indemnity cover.

'Bringing the arrangements in-house means the SRA will be able to monitor the fund, and ensure it has the resources necessary to operate properly in the long-term.

'We are also pleased to note that the regulator has agreed to two significant suggestions made in our response to their consultation.

'If at some point in the future the SIF is wound up, and the SRA has no further indemnification purpose for the residual funds, any remaining money would return to the Law Society, to be used for the benefit of the profession.

'Also, in the unlikely event a dispute arises concerning the fund, an independent body will be called upon to appoint an arbitrator.'

 

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