The Solicitors Regulation Authority is pushing ahead with huge increases in fees to prop up the compensation fund after seemingly encountering little opposition to its plans.
Following a board meeting last week, it was agreed that individual contributions for 2024/25 will be £90 (up from £30) and firm contributions will be £2,220 – up from £660. They will come into force from November, assuming the Legal Services Board approves the change.
The regulator says the fund - which repays clients who have lost money as a result of their solicitor’s conduct – has come under significant pressure in the last year from a glut of costly interventions. This includes an expected £35m of claims following the SRA’s closure of Axiom Ince, which is subject to an ongoing review of the regulator’s response.
Increases in contributions will allow the fund reserves to be rebuilt over the next two to three years, while a wider review of the system is carried out.
Paul Philip, chief executive of the SRA, said: ‘The fund plays a critical role in protecting the public and maintaining trust in the profession. We have steadily reduced contributions to the fund over the last five years, but this increase is needed due to the unprecedented level of recent claims on the back of large interventions.
‘It’s vital that there is enough money in the fund to continue to provide a safety net for consumers, but we recognise the profession’s concerns about a large increase. So we have done all we can to keep that rise down next year.’
Increased contributions were revealed earlier this year as the SRA consulted on how to ensure the compensation fund survived recent interventions.
The regulator received 18 responses to this consultation, including written contributions from the Law Society, the Association of Personal Injury Lawyers and the Sole Practitioners Group.
Some responses highlighted the greater impact on small firms and suggested the basis for deciding contributions should be reconsidered, in particular the fact that firms of different sizes pay the same amount. The SRA confirmed this issue will be subject to consultation later this year.
The Law Society criticised the lack of data and called for greater transparency in explaining how figures were calculated.
The SRA said more detail would be included in its representation to the LSB and added in response: ‘Due to the low level of responses received to the consultation and the fact that we are considering contributions as part of the consumer protection work leads us to conclude that it remains appropriate to approve the contributions as proposed.’
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