The Legal Services Board (LSB) has extended by up to two months the time it can take to decide whether to approve a cut in the minimum indemnity limit for law firms.
In a letter to Paul Philip, director of the Solicitors Regulation Authority (SRA), Chris Kenny, chief executive of the LSB, said that “due to the complexity of the issues” the board needed to extend the decision period to Friday 10 October.
Crispin Passmore, executive director for policy at the SRA, said that a “positive decision by the end of August” on the planned cut in the cover limit from £2m to £500,000 would allow the change to take place in time for the renewal deadline of 1 October.
“The LSB has always had the option of extending its assessment periods and often does so – this is not an unusual move,” Mr Passmore said.
“If the LSB does not make a decision in time, or does not approve the rule changes, then the current rules remain in place for those policies that need to be renewed on 1 October.”
Mr Passmore said the LSB received the SRA’s application on 15 July and had an initial 28-day period in which to assess the proposals.
He added that, following the extension, “the ball is very much in the court of the LSB”.
In his letter to the SRA, Mr Kenny said that after “an initial assessment” of the SRA’s application for a rule change, the board concluded that it need to extend the decision period to a total of up to three months.
The LSB issued its extension notice under Schedule 4 to the Legal Services Act 2007.
The scale of opposition to the SRA’s plans, particularly from conveyancers and mortgage lenders, became clear this week when the LSB published on its website letters urging it not to approve the rule change.
The Council of Mortgage Lenders warned that members could be forced into taking “fast and potentially drastic action”.