• March 28, 2024
 Law Society: the SRA must not ditch SIF

Law Society: the SRA must not ditch SIF

In a rare move, the Law Society has united with the Legal Services Consumer Panel (LSCP) to oppose plans by the Solicitors Regulation Authority (SRA) to close the Solicitors Indemnity Fund (SIF), a step which would see consumer protection weakened.

The SRA wants to close SIF, effectively ending long-term protection for consumers, with nothing to replace it. It claims that the cost of running it, compared to the volume and value of claims, is disproportionate to the consumer benefit it delivers.

It accepts that some consumers will lose out, but argues that the average successful claim of £34,000 is “modest”.

According to the Law Society, the SRA has not shown how ending this protection has any benefit to consumers, either in terms of reducing the price of legal services or increasing consumer choice. Moreover, they say their suggestion that the representative body could provide a similar level of consumer protection through a newly created fund is “misleading”.

The Law Society supports the continuation of SIF as a long-term consumer protection, backed up by a levy on law firms of £240 per year, which calculations demonstrate would have no material impact on the fees charged to consumers.

The LSCP agrees that SIF should not be closed, especially while there are still assets within it, until alternative arrangements are made that would give consumers similar protection.

Law Society of England and Wales president I. Stephanie Boyce said:

It is a sign of how seriously concerned we all are by the SRA’s proposal that the body representing the interests of consumers of legal service is joining forces with the body representing the providers of those services to take on the statutory regulator.

Our profession is happy to pay for SIF. Any knock-on cost to consumers will have negligible or no impact on the price of legal services – but even if it did, the increases would be tiny, measured in the 10s of pence.”

Boyce continued:

People go to solicitors confident in the assumption that they are highly qualified and regulated. On the rare occasions something goes wrong, consumers believe their solicitor is adequately and appropriately insured, and that they will be compensated for any losses.

Ending SIF would immediately stop long-term protection for consumers exposed to long-tail risks.”

Sarah Chambers, chair of the Legal Services Consumer Panel, said:

It is true that the administration costs of this Fund seem remarkably high given the number and level of claims paid out.

Nevertheless, we remain very concerned that the proposal to close SIF may be taken forward without proper consideration of the impact on consumers of ‘unknown’ mistakes made many years ago, and of how protection could be maintained through continuing SIF or replacing it with an alternative which offers a similar level of protection. The SRA should think again.”

Jamie Lennox, Editor, Today's Wills and Probate

Editor of Today's Conveyancer, Today's Wills and Probate, and Today's Family Lawyer Contact LinkedIn jamie.lennox@todaysmedia.co.uk Twitter