Retired solicitors will not be able to sleep at night for fear they could be ruined by a negligence claim if the SRA closes the Solicitors Indemnity Fund.
That is one argument made by the Solicitors Sole Practitioners Group (SPG) in a forthright response to the regulator’s consultation on the planned closure of SIF later this year. ‘There is no valid argument that can be made for the fund’s closure,’ the 4,500-strong membership body declares bluntly.
However, while solicitor representatives appear united in their opposition to closure of the scheme, there is disagreement over how the SIF should be sustained. Earlier this week, the Law Society proposed an annual levy of £240 per law firm - already mooted but rejected by the SRA – to keep the scheme going. In a joint statement with the Legal Services Consumer Panel, Chancery Lane said the levy would have no impact on fees charged to consumers.
The SPG disputes the need for an annual levy, despite suggesting last year that a PC fee top-up £10 per solicitor per year might suffice. It points out that there has been no significant diminution in the value of the funds over the scheme’s life below their original capital in excess of £30m. That conclusion is based on a report commissioned by the group from forensic accountants Honeycomb Forensic Accounting to advise on figures cited by the SRA. According to the SPG, the regulator’s calculations did not take into account the income receivable from the money invested by the fund.
SPG honorary secretary Clive Sutton said: ‘It cannot be said that no levy would ever be required, but with careful administration and with the backup of a potential levy against the profession if required, it may be possible to continue to run the fund without any levy for some years requiring only an occasional call upon the profession.’
SIF, which provides post six-year run-off cover for firms that have shut down, has been under threat since 2013 when the SRA decided upon closure. The regulator says the cost of running the fund, compared with the volume and value of claims - averaging £34,000 - is disproportionate to its benefit.
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