How we decide on compensation fund applications and examples

The number of applications we have received to the compensation fund has rapidly increased.

This means from 8 April 2026, we are prioritising how we assess and process all applications to the fund based on different categories of applications (outlined below), rather than the order of when an application was received. This includes all applications to the compensation fund.

Taking this approach allows us to make payments to those with urgent needs based on their situation or vulnerabilities, such as the risk of being homeless due to the collapse of a sale.

Where applicants can show particularor vulnerability in their application, we will take this into account in our initial prioritisation assessment.

We have set out below the current prioritisation criteria. These will be continually reviewed and any updates will be published on this webpage.

Emergency payments

We have a well-established process for dealing with emergency applications which allows swifter decisions in the cases where someone could face the most significant harm.

Our focus for emergency payments is where someone is likely to suffer exceptional hardship if they do not receive an urgent payment from the fund. The most common example is where a person is buying a house to live in and contracts have already exchanged. The applicant will be in breach of contract if they cannot complete and risk losing their deposit and the purchase.

These will be processed immediately.

Individuals purchasing a property to live in

The next priority group after emergency payments are those relating to the purchase or remortgage of a residential property. For example, someone who:

• intends to purchase a property to live in (rather than to let out or as an investment), but they do not yet have a contractual obligation to complete the transaction
• has used alternative funds to continue with their property transaction
• has sold a property and purchased another, but their original mortgage has not been redeemed
• has remortgaged their home and their previous mortgage has not been redeemed
• who has completed their purchase, but the Stamp Duty Land Tax has not been paid or their purchase has not been registered with HMLR.

These will be processed immediately.

Individuals who have paid for legal services that have not been completed

The next category of applications relates to funds paid for legal services that have not been completed. We acknowledge that applicants will need these funds to continue their transactions, but they are likely to be smaller sums than those in the categories above and do not have the same level of impact. For example, someone who:

• has paid upfront for legal work which was not completed
• who is due money back in respect of their transaction.

These will be processed three months from the date the application is received.

Individuals selling properties and individuals buying investment properties

Applications likely to meet this description include:

• those purchasing an additional property to their primary residence
• those who have sold their property and are due funds that a law firm was meant to be holding (to include any retentions where applicable).

These will be processed six months from the date the application is received.

Trusts and probate matters

Applications that are likely to meet this description are:

• from the executor of an estate where a law firm held estate money
• from trustees for funds held in trust.

We appreciate that this will have an impact on the beneficiaries to the estates involved. However, we need to ensure that we are considering the applications that have the potential for the greatest harm to applicants. It is not unusual for beneficiaries to have to wait some time to receive money from an estate or trust.

For this category in particular the consideration of whether an applicant can show will be particularly important and may lead to the application being prioritised.

These will be processed six months from the date the application is received.

Commercial transactions

The final group of applications we will consider will be transactions where a law firm was instructed by a sole trader, business or company.

These will be processed nine months from the date the application is received.

Equality impact of our revised approach to prioritising claims

We have considered the impact of our revised approach to prioritising applications to the compensation fund, including on people with particular protected characteristics. The criteria are intended to prioritise applicants who may be in a vulnerable position. We have not identified any evidence to suggest there will be a differential impact on any particular group as a result of the criteria we have adopted.