The Solicitors Regulation Authority (SRA) is to replace the Solicitors Indemnity Fund (SIF) next September with new indemnity arrangements that it will run itself.
The announcement came just a fortnight after the deadline for responses to a discussion paper the SRA issued at the start of August, uncommonly quick by the regulator’s standards.
The discussion paper said “a new consumer protection arrangement within the SRA” – either an indemnity scheme or compensation fund – was likely to be more cost-effective than retaining the SIF, a separate company which covers claims made against solicitors after the six-year period of run-off cover.
Among other things, it advanced the idea of blocking claims from businesses, charities or trusts with income or assets of over £2m.
Neither the detail of how the new scheme will operate nor an analysis of the responses has been released yet. The SRA said it would launch a consultation on the arrangements and rules for the new scheme by the end of the month.
But it confirmed that it would maintain consumer protection at the same level of cover as the SIF.
SRA chair Anna Bradley said: “We have been looking at how best to maintain consumer protection for negligence claims brought more than six years after a firm has closed in a cost-effective and proportionate way and have decided that an SRA-run indemnity scheme is the right way forward.
“This approach will provide that important protection for those who need it, while giving us clear oversight of how the indemnity operates, enabling us to run the scheme efficiently and realise potential cost savings.”
Law Society president I Stephanie Boyce said she was pleased that the SRA board “appears to have given due consideration to the profession’s views on this important matter”.
She continued: “This is likely to be a relief to the many members, and former members, who have been worried that the closure of SIF would mean the ending of [post-six years cover] as a regulatory arrangement, when for most there was little prospect of finding alternative comparable protection on the open market.”
Ms Boyce said the society wanted to be certain that the new scheme would be affordable in the long term, provide good value for money, and maintain “the strong protections that have benefited clients and solicitors alike under the SIF”.