The Solicitors Regulation Authority says it could have saved £2.5m in the last two years on the cost of interventions if rules governing the storage of client files from defunct firms had been more relaxed.
The regulator wants to scrap the mandatory seven-year period that it has to store documents from the date it intervenes in a firm. But of the six million files collected, only 33,000 have ever been requested by clients – 0.55% of the total.
In a consultation document published yesterday, the SRA says the estimated cost of storing files in line with current policy for the 30 interventions in the past 24 months is £4.4m.
Based on proposed changes to document types and time periods, the authority envisages costs could be driven down to around £1.9m.
Helen Herniman, the SRA’s director of client protection, said the predicted number of interventions it may have to carry out has ‘risen dramatically’ and associated costs, especially where firms have failed to adhere to or implement effective file destruction policies, have increased significantly.
‘Intervention costs have therefore been driven by the need to secure and manage a disproportionately large number of closed files,’ she said. ‘The profession ultimately bears these costs, so we promised in March that we would look at ways of reducing the costs of interventions where possible.
‘We have considered how long we keep files following an intervention into a firm, and the proposed changes to our policy are set out in the consultation document.’
The SRA proposes to secure and retain client files for a ‘reasonable’ period which gives clients the opportunity to contact the SRA. Original documents shall continue to be retained for longer.
The consultation document lists categories of files and proposes anything from one to eight years’ retention.
The consultation will last for eight weeks with a decision expected early next year.