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LSB rejects SRA’s plans to reduce minimum PII cover

'We were certainly not persuaded by the evidence put forward,' says Chris Kenny

27 November 2014

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By Manju Manglani, Editor (@ManjuManglani)

The Solicitors Regulation Authority's (SRA's) application to reduce the minimum level of professional indemnity insurance (PII) cover for UK law firms has been rejected by the Legal Services Board (LSB).

In a decision released today, the LSB said that it has however approved the SRA's application to add a new outcome to its Code of Conduct which requires firms to assess and purchase an appropriate level of PII insurance.

The LSB has also approved the SRA's request to make further technical amendments to the SRA's regulatory arrangements, including amendments to the SRA Glossary.

"We welcome the SRA's decision to comprehensively review financial protection arrangements and expect that it will reflect the outcome of this application in its further work. What matters is that firms have the right incentives to assess their risks accurately and so ensure that consumers are protected," said the LSB's chief executive, Chris Kenny.

"It is not clear to the Board that a minimum level of cover necessarily has a place in achieving that and we were certainly not persuaded by the evidence put forward for the figures proposed."

The SRA had proposed reducing the minimum level of PII cover for regulated firms from the current level of £2m (£3m for incorporated firms and LLPs) for any one claim to £500,000.

The full details of and reasoning behind the LSB's decision on the SRA's application can be found here.

The LSB oversees nine approved regulators, which in turn regulate individual legal practitioners. The approved regulators are the Law Society, the Bar Council, the Master of the Faculties, the Chartered Institute of Legal Executives, the Council for Licensed Conveyancers, the Chartered Institute of Patent Attorneys, the Institute of Trade Mark Attorneys, the Association of Costs Lawyers and the Institute of Chartered Accountants in England and Wales.

In addition, the Institute of Chartered Accountants of Scotland and the Association of Chartered Certified Accountants are listed as approved regulators in relation only to reserved probate activities.

 

 

 

 

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Finance Risk & Compliance