Board decides on Financial Protection policy
29 May 2012
The Board of the Solicitors Regulation Authority (SRA) has decided to make a number of changes to its Financial Protection Policy, as part of the annual review process.
Board members agreed to approve the necessary changes to the Qualifying Insurer’s Agreement and to the rules within the Client Protection section of the SRA Handbook when it met on Wednesday 16 May. The changes are designed to ensure the open-market system of PII is sustainable and competitive for the foreseeable future, and are proposed for implementation in October 2012.
Antony Townsend, SRA Chief Executive, said: "As a public interest regulator, our objective is to ensure that we have a comprehensive set of arrangements to protect clients through compulsory Professional Indemnity Insurance and the SRA's Compensation Fund. We believe the proposed changes to the Financial Protection Policy will secure that position.
"We had a good response to the latest consultation on the policy, and adjusted our proposals in response to some of the comments."
The consultation ran for 12 weeks until 17 January and looked at the changes proposed as part of the April 2011 Policy Statement. The main proposed changes were:
The closing of the Assigned-Risks Pool (ARP) as a provider of policies of qualifying insurance from 30 September 2013 (with the exception of the continued provision of run-off cover started before that date)
A requirement from October 2012 that all policies of qualifying insurance make provision for extension by 90 days at the end of the insurance period if the insured firm has not taken out a new policy of qualifying insurance
Changes to Authorisation Rules to come into force in October 2013 to control the work undertaken by firms during that 90-day period, and to remove authorisation at the end of the 90-day period should no new policy of qualifying insurance be obtained
Provisions for the funding of the ARP in 2012/13 to be provided by both the regulated community and the qualifying insurers
Provisions to move responsibility for making payments in respect of uninsured firms from the ARP to the Compensation Fund in 2012/13
Requirement for the qualifying insurers to submit their credit ratings to the SRA, for publishing on the SRA website, and to include such ratings in quotation documents
Numerous stakeholders submitted their comments and these views, along with the SRA's responses to them, are available on the SRA's website. Go to the consultation feedback.