The Law Society has welcomed a decision by the regulator to underwrite the liabilities of the Solicitors Indemnity Fund - a decision which practitioners say could allow the threatened fund to continue indefinitely. 

The fund, set up to meet claims on solicitors after their six-year run-off cover has expired, has been under threat since 2013 when the Solicitors Regulation Authority decided upon closure. The Law Society and the Sole Practitioners Group have campaigned strongly for its preservation.

Minutes of the SRA's latest board meeting, published this week, reveal that the SRA has agreed to meet the fund's request to underwrite liabilities of up to £6 million in the year from this September. The board agreed that the SRA 'would now provide the necessary undertaking to [the fund] and submit the necessary application to the Legal Services Board for the further 12 month extension', the minutes state. 

Lymington sole practitioner Clive Sutton, who has investigated the SIF question for the Sole Practitioners Group, said that the £6m 'would be almost exactly the formula which would be proposed by those wishing SIF to continue'.

'The perceived excessive costs of SIF are created by the need to provide sufficient cover and reserves for what is effectively a closed fund at the moment,' he told the Gazette. 'However if the fund is covered by SRA indemnity, and through the SRA, the profession, then those costs reduce dramatically, making the cost of the cover much more proportionate.

'It would seem there is therefore an easy answer to this problem - putting the indemnity under a formal structure with an appropriate administration to continue the scheme into the future.' 

Sutton added: 'The professional accountancy advice obtained by the SPG, which has not yet been contradicted by the SRA, is that there is sufficient income from the funds held at present, for the fund be self-supporting if operated on this basis.'

The Law Society said: 'We welcome the SRA’s recognition of its responsibility for indemnity arrangements that protect the users of legal services and address consumer detriment. We also welcome the SRA’s decision to further extend the Solicitors Indemnity Fund and to underwrite it until the end of September 2023. This is a responsible course of action while the regulator considers options for providing continued consumer protection in a proportionate way.'

 

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