News release

SRA debate on financial protections for when things go wrong

A Solicitors Regulation Authority (SRA) discussion paper launched this week looks at striking the right balance in providing financial protections for the public, and the cost for firms and individual solicitors.

Getting the price point right for indemnity insurance protections will support new growth and innovation in the legal sector, enabling new firms and individuals to enter the market with new products and services at competitive prices.

The SRA is also looking at ensuring that its public compensation fund cover provides the right safety net for the public, particularly the most vulnerable and those in need. It wants to make sure that compensation arrangements remain fit for purpose in the changing legal market.

Paul Philip, SRA Chief Executive said: "PII and compensation arrangements play an important part in our regulatory model. We need to strike the right balance between freeing up law firms to grow and providing appropriate consumer protection. This consultation is aimed at moving us towards a more appropriate regulatory model in this area."

Interested parties have until 16 September to feed back to the SRA. Feedback resulting from the discussion paper will inform formal proposals for indemnity insurance and public compensation protection early next year.

Read the discussion paper

 

Note to editors

The SRA consulted on some of the issues contained in the discussion paper last year. Respondents at the time said they wanted more information before taking a view. The SRA is working with insurance companies to obtain the relevant data to further inform its proposals for change from next year.

Firms that hold client money contribute to the Compensation Fund, which for example replaces money lost as a result of client monies being misappropriated, or unaccounted for by a solicitor. Full details are contained in the discussion paper.

Last year, the SRA paid out £23.79million to claimants from the Compensation Fund.

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