By Legal Futures Associate Allianz Legal Protection [1]
The Solicitors Regulation Authority (SRA) launched a consultation earlier this year and is considering introducing tighter regulation of third-party funding arrangements to strengthen consumer protection, particularly following recent law firm failures. While solicitor firms may not welcome further regulation, the proposed changes include:
- new professional conduct standards, including the need to maintain independence from a funder and inform clients that funders are not SRA regulated,
- clear, prominent funding information in plain language, including redress options and how to claim on legal expenses insurance,
- documented third-party funding arrangement assessments and regular returns to the SRA.
The 10-week consultation closed on 17 September 2026, but the direction of travel is clear: tighter regulation is likely as the SRA seeks to reduce the risk of further large-scale law firm failures.
How can After the Event (ATE) Insurers help?
For many years, ATE insurers have been asked to support disbursement funding as part of a wider package alongside ATE cover. This support continues to develop and now includes:
- simple drawdown facilities, that are usually capped and generally cover around 25-30% of a firm’s total disbursement funding needs,
- partnerships with medical agencies, which typically offer a two or three-year deferment period.
These solutions are useful but imperfect, as caps and time limits mean they rarely cover a firm’s full disbursement funding requirements.
This creates an opportunity for ATE insurers to offer solutions that support solicitors’ funding needs while also improving transparency and reducing consumer risk.
Allianz Legal Protection has introduced measures that partly address the proposed changes for disbursement funding in medical negligence and personal injury cases. Allianz Legal Protection’s product provides full disbursement funding as an insured benefit within the ATE policy, with payment made when disbursements are incurred.
The indemnity therefore remains in place until the case is resolved. If the case is unsuccessful, the claim has already been paid; if the case is successful, the disbursements are repaid from recovered costs.
Allianz’s financial stability and AA rating from Standard and Poor’s help to provide a high level of security for any regulator.
Allianz continues to develop solutions to support good customer outcomes, act in clients’ best interests, and help give solicitors confidence by removing unnecessary complexity.
Paying insured disbursements when they are incurred gives customers a simple solution that is easy to understand, avoids the need for separate consumer credit agreements at a vulnerable time and remains in place for the duration of the legal action. In the context of the SRA’s new approach, it helps to remove many of the risks associated with disbursement funding.