The Solicitors Regulation Authority (SRA) has taken control of the running of the Solicitors Indemnity Fund (SIF), meaning solicitors’ clients will continue to be able to claim compensation – even if something is found to have gone wrong years after a firm has closed.
The SRA Board decided in January to bring SIF under its control to make sure consumer protection continues for post six-year negligence claims. The new arrangements came into effect on Sunday, 1st October.
To support members of the public in making claims, the SRA has published a new claim form with supporting information on its website. Law Society of England and Wales President Lubna Shuja, said:
“We are delighted the SRA will continue to provide consumers with the vital protections of the SIF. This move followed extensive lobbying from the Law Society on behalf of solicitors and their clients, urging the SRA to work with us, the insurance industry and wider stakeholders to find a sustainable solution to the issue of run-off indemnity cover and long-term consumer protection.
This means clients can have confidence not only that their solicitor is adequately and appropriately insured while a firm remains open, but there are systems in place to make sure that they can still be compensated in the unlikely event that a claim is identified beyond the usual six-year term of solicitors’ mandatory run-off cover.”
By taking responsibility for the operation of SIF, the SRA will ensure appropriate oversight and governance of the scheme. Change should also lead to a reduction in the scheme’s running costs compared to the previous arrangements, meaning more money will be available for the fund’s core purpose of settling claims. Paul Philip, SRA Chief Executive said:
“Both the public and profession value the protections the SIF provides. By running the scheme ourselves, we will provide assurance for all that there is ongoing protection for clients.
Running the scheme will also give us clear oversight of how the indemnity operates, enabling us to run it efficiently and realise potential cost savings.”
Shuja said that bringing the arrangements in-house means the “SRA will be able to monitor the SIF and ensure it has the resources necessary to operate properly in the long term”. She added:
“The Law Society believes that a levy on the profession may be required to prevent the SIF’s assets from being run down, however the SRA has decided not to impose such a charge at this time. If the need arises in the future, the SRA has committed to carrying out a further consultation on the issue.
This is the culmination of a collaborative effort from a range of stakeholders who proved the profession as a whole wanted to retain the SIF.”
The regulator agreed to two significant suggestions we made:
- An independent body will be called upon to appoint an arbitrator in the unlikely event a dispute arises concerning the fund.
- If at some point in the future the SIF is wound up, and the SRA has no further indemnification purpose for the residual funds, any remaining money would return to the Law Society, to be used for the benefit of the profession.
Lubna Shuja concluded:
“We acknowledge the way the SRA listened to the concerns expressed by the Law Society and consumer groups and responded responsibly. We have been greatly impressed by the huge amount of work undertaken by the SRA staff to bring the SIF under the regulator’s direct management in time for the start of October.
We look forward to continuing to work constructively with the SRA on this important consumer and solicitor protection, long into the future.”