The Solicitors Regulation Authority (SRA) has announced that payments from solicitors to the Compensation Fund for the next practising year are to fall once more. Subject to SRA Board and Legal Services Board approval, the contribution for an individual will be £50 (down from £60), while the firm contribution will be £950 (down £200 from £1,150).
The SRA has taken the view that it does not want to place unnecessary costs on those whom it regulates, although is conscious of the fact that the fund needs to have has sufficient reserves to meet anticipated claims. The level of contributions takes account of past and prospective claim levels and any trends.
The contribution levels were increased in 2018/19 due to the risk of high value claims linked to solicitors involvement in dubious investment schemes, and have been reduced in the last two years.
Paul Philip, SRA Chief Executive said:
“The Compensation Fund provides an essential safety net for those who need it, helping to maintain trust in the profession.
“We have to make sure there are enough funds to cover current and potential claims. The previous rises in contributions reflected forecasts of potentially significant increases in claims on the fund, in particular from solicitor involvement in dubious investment schemes.
“With fewer than expected claims in recent years, I am pleased that we continue to bring contribution levels down.”
So far as the future is concerned, the SRA is in the process of consulting on the principles it uses to set the annual Compensation Fund contributions, as part of Business Plan and Budget consultation (see https://bit.ly/3cS9JC5). The Law Society has published its own consultation on funding requirements and fees – “Practising fees consultation 2020-21“.