The Solicitors Regulation Authority (SRA) is seeking the views of the profession, public and representative groups on its proposals in relation to the Compensation Fund.
The aim of the proposals is to continue to protect clients who lose money because of dishonesty by a solicitor, or in circumstances where they cannot claim on a law firms’ professional indemnity insurance, while at the same time making sure management of the fund remains sustainable. The proposals, which build on feedback from an earlier consultation, include introducing a maximum cap on related claims, dropping proposals for the introduction of a hardship test, making sure the fund remains sustainable and ways to make it clearer when it is likely a grant from the fund would be made.
The SRA state that their aim is to make sure grants are prioritised and focused where they are most needed, and to demonstrate that decisions are made consistently against clear, objective criteria to show the Compensation Fund is operated in a transparent way.
The proposals include:
- Focusing eligibility criteria on people that need most protection and removing the current hardship tests;
- Only allowing applications from people that have been provided or are a recipient of a legal service from the solicitor involved;
- Reducing the single claim limit to £500,000, and being clearer about how we apply this limit;
- Capping the total amount payable for a group of related claims; and
- No longer allowing claims where an insurance policy has been voided or has already paid out money.
The consultation will run to 21 April. Once finalised, any agreed changes will need approval by the Board of the SRA and Legal Services Board.