Solicitors leaders today warned that consumers could be left high and dry if the regulator pushes ahead with the discontinuation of post six-year run off cover (PSYROC) and the closure of the Solicitors Indemnity Fund (SIF).
The Law Society of England and Wales made clear its concerns in the wake of the publication of the Solicitors Regulation Authority’s (SRA) consultation on the future of SIF.
SIF currently provides supplementary run-off cover for firms that have closed, ensuring ongoing protection for clients, partners and staff once their mandatory six year run-off period has come to an end.
The SRA planned to close SIF on 30 September this year, but we successfully lobbied the solicitors’ regulator to push closure back to 30 September 2022.
The SRA is seeking views on whether its regulatory arrangements should include PYSROC and what that means for the future of SIF.
The SRA has indicated its preferred option is not to continue with PSYROC, claiming that the costs compared to the volume and value of claims outweigh the efficiency of delivering consumer protection.
Law Society of England and Wales president I. Stephanie Boyce said: “The SRA has outlined its intention to make the marketplace less safe for consumers by getting rid of PSYROC and SIF.
“Solicitors want consumers to be protected and one of the things on which the profession prides itself is that it offers a service from highly trained professionals who are adequately and appropriately insured for the rare occasions something goes wrong.
“The removal of PSYROC and SIF will have a huge impact on the consumers affected. The average successful claim from SIF is over £34,000, which is a large amount of money for most people. The consumers who will suffer employed (and employ) solicitors on the reasonable assumption they would have comprehensive protection if something went wrong.
“The SRA is suggesting this comprehensive protection is removed, but it is yet to demonstrate that the removal of PSYROC will have any material impact on the cost of legal services or lead to any improvement in the market for legal services.
“Solicitors strive to provide the best service, but they also want proper consumer protections should claims arise. It would be in the best interests of consumers and the profession alike to retain the insurance protection that SIF provides.
“The Law Society will be responding to the consultation in full, following discussions with our members, and having given the matter proper consideration. We believe the SRA could benefit from any further insights that members or former members might see fit to provide.”