SRA tells uninsured firms to “come clean”

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8 January 2014


It is unclear how many of the 116 firms that were meant to have shut down last week for failing to secure professional indemnity insurance (PII) have actually done so, the Solicitors Regulation Authority (SRA) admitted yesterday.

There was a spate of non-cooperation with the regulator as the 29 December deadline approached, even among firms that previously had been in contact, meaning some may now be operating without cover.

As of 18 December, the SRA had established that there were 117 firms without PII; however, one managed to find insurance on 27 December.

The SRA resorted yesterday to issuing a public warning to firms “to come clean about their insurance position”. A spokesman said it would contact all of them one way or another, but refused to say how many firms had definitely closed.

The regulator said it has worked with all firms in the 90-day extended policy period (EPP) that began on 1 October “to ensure that they were prepared for this eventuality and could cease trading in an orderly way. Compliance plans were agreed to by managers providing undertakings for the orderly wind down of the practice, including dealing with client matters and monies.

“Firms that did not co-operate with the SRA could have jeopardised their clients’ interests. Investigations officers from the SRA have visited some firms where there was a failure to co-operate in the process or to agree to the compliance plan.” Firms in the EPP were not permitted to take on new clients after 31 October.

The SRA said it is now making sure those firms with no insurance do not carry out work on live matters – where they are, intervention could result. Those firms which fail to co-operate when contacted will face enforcement action.

Mike Haley, the SRA’s director of supervision, said: “We accept that facing closure is a difficult situation for firms, so during the EPP, we endeavoured to protect clients’ interests while also making sure we did not add to the pressure the firms were under. However, since no firm should now be carrying out live matters unless they have secured a new policy, our primary concern is that consumers are not put at risk.

“Firms without insurance should not be practising, they should not be working on live matters and, above all, they should have informed us of their position. Those that continue to avoid disclosing their situation to us will be dealt with robustly.”

The firms were told that they should have finalised all existing matters or arranged their transfer to other firms, with the client’s consent, by 29 December.

The SRA’s published guidance on closing down includes details about what could and could not be done after closure of the firm, as well as steps that need to be taken in terms of signage, websites, letterheads and so on, so that clients and others are clear about the status of the firm.

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One Response to “SRA tells uninsured firms to “come clean””

  1. I fully understand why the SRA wants to protect the firms who are co-operating fully but as for the other firms; I am at a loss to understand why they aren’t being named. The situation is becoming ridiculous; some firms are asking other firms to provide evidence of their PII cover before dealing with them. Perhaps the SRA could offer some general guidance?

  2. Rob Hailstone on January 8th, 2014 at 6:57 am

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