The saga of the Solicitors Indemnity Fund closure took another turn this week as representatives of the profession and clients urged the Solicitors Regulation Authority to keep the fund going.
The Law Society and Legal Services Consumer Panel wrote jointly to SRA chair Anna Bradley pleading with the regulator to extend the Solicitors Indemnity Fund beyond September’s closure date.
The SRA has said the fund, which covers firms and solicitors facing claims beyond their six-year run-off period, is not within its remit and wants to pass responsibility for it to the Law Society, the representative body.
But with the insurance market so difficult at the moment, retired solicitors stuck in the middle face the uncertainty of being unable to secure cover and living with the knowledge they could face huge payouts for historic claims.
In the joint letter, Law Society president I. Stephanie Boyce and consumer panel chair Sarah Chambers said the SRA should either extend the SIF beyond the end of September, or put in place an immediate alternative arrangement to mitigate the impact of its closure.
‘It is a measure of our shared concern that our two organisations have signed a joint letter,’ they said. ‘We believe the decision – which was made some time ago in very different circumstances – to close the fund this year, in the hope that the market will provide equivalent run-off indemnity cover, is not appropriate in current circumstances. The hard conditions which currently prevail in the insurance market mean that there is no reasonable prospect that alternative cover will be available.’
According to the most recent accounts for the fund, established in 1987, the SIF had net assets of £22.48m at 31 October 2020, with around 200 cases ongoing. The joint letter states that an extension may be affordable within existing funds, offering the chance to provide cover until a ‘viable, adequate and appropriate market replacement is established’.
Minutes from the SRA board for last month’s meeting suggest that a solution is being worked on. The board noted that work to wind down the SIF and to put in place an alternative arrangement with a third-party insurer to meet the liabilities currently being met from the fund was continuing. A further paper on this was due to be brought to the board later this year.
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