Bid for higher SRA fining powers and lower burden of proof “on government agenda”

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10 August 2017

Nally: SDT will remain the master of its own destiny

The Treasury yesterday finally published an update on progress with the recommendations of the Insurance Fraud Taskforce, showing that the possibility of increasing the fining power of the Solicitors Regulation Authority (SRA) remains on the agenda.

The update – which is six months’ old – also indicated that reconsidering the standard of proof before the Solicitors Disciplinary Tribunal could also be considered, while work is being done on a model letter insurers can send to claimants to make sure they have instructed lawyers.

The taskforce’s report, which was published in January 2016, contained 26 recommendations, including that the government should consider strengthening the fining powers of the SRA for fraudulent or corrupt activity – it is currently limited to £2,000 for ‘traditional’ law firms and their staff, compared to £250m for alternative business structures and £50m for those working in them.

The SRA has been lobbying for this for several years.

The taskforce also recommended that the government should consider reviewing the standard of proof at the tribunal, as it said the criminal standard “means that those who are dishonest on the balance of probabilities (the civil standard of proof) can continue to practise”.

It said: “This undermines the strength of the regulator, and means its enforcement actions may not act as a credible deterrent.”

On these two issues, the update said: “The government committed to consider whether the SRA’s enforcement powers should be strengthened, including potentially increasing its fining powers.”

The Bar Standards Board is currently considering the responses to its consultation on whether to lower the standard of proof in cases before the Bar Disciplinary Tribunal.

In its response to the consultation, the SDT – which is under pressure from the SRA to move to the civil standard – said it would be consulting on the issue.

SDT president Edward Nally said: “The SDT will remain the master of its own destiny in this debate. Its membership will do what it believes to be right in a rational, informed, evidence-based manner.

“The SDT will lead on the issue of the standard of proof applied in its proceedings on its own terms and in its own time and will not be distracted by the sometimes ill-informed rhetoric of others.

“The SDT is watching the BSB consultation with interest, recognising that the Bar’s tribunal is a smaller body than the SDT with different issues.”

The update also revealed work on to produce a standard letter for insurers to send to claimants directly to verify whether they have instructed a firm to represent them.

It said: “Whilst some guidance is provided in their guidance note, the Claims Portal board are currently considering more detailed guidance to include proposed wordings that insurers should utilise that would be acceptable to the Claims Portal Ltd behaviours committee…

“The SRA will continue to engage with organisations to seek information about firms that are possibly acting without valid instructions.

It said the Association of British Insurers (ABI) and Insurance Fraud Bureau (IFB) had commenced work to agree text of a model letter, to develop a list recommending what should/should not be discussed by telephone, and recommending evidential requirements.

A draft narrative was to be discussed with the SRA, prior to “buy-in” being sought from the Association of Personal Injury Lawyers, Motor Accident Solicitors Society, Forum of Insurance Lawyers, and ABI.

The agreed text will eventually be incorporated into the revised IFB counter fraud best practice guidance.

The update also reported on the ABI’s view that developing a “long-term cross-industry [anti-fraud] public communications strategy”, as recommended, required a “significant commitment” from the industry over 10 years or more. The project is still in the scoping phase.

Meanwhile, the insurance industry has extended its funding commitment for the Insurance Fraud Register until 2020, and is working on the ‘Counter Fraud Data Alliance’, an initiative to share proven fraud data between public and private sector organisations.

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