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SRA to reform professional indemnity insurance arrangements

Deadline for responses to its discussion paper is 16 September

13 July 2015

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The Solicitors Regulation Authority of England & Wales has launched a discussion paper to review and reform client financial protection arrangements.

The paper sets out and seeks views on a range of options for reforming professional indemnity insurance (PII) arrangements and for the Compensation Fund.

"PII and compensation arrangements play an important part in our regulatory model," said Paul Philip, chief executive of the SRA.

"We need to strike the right balance between freeing up law firms to grow and providing appropriate consumer protection. This consultation is aimed at moving us towards a more appropriate regulatory model in this area."

The regulator has suggested that "getting the price point right for indemnity insurance protections will support new growth and innovation in the legal sector, enabling new firms and individuals to enter the market with new products and services at competitive prices".

It added that it "wants to make sure that compensation arrangements remain fit for purpose in the changing legal market".

Responses to the discussion paper must be submitted to the SRA by 16 September.

Feedback resulting from the discussion paper will inform formal proposals for reforming PII arrangements and for the Compensation Fund early next year.

The SRA consulted on some of the issues contained in the discussion paper last year. Respondents at the time said they wanted more information before taking a view.

The regulator said it is currently "working with insurance companies to obtain the relevant data to further inform its proposals for change from next year".

Detailed proposals will be provided in a further SRA consultation in early 2016, so the earliest any major changes can be implemented is October 2016.

Last year, the SRA paid out £23.79m to claimants from the Compensation Fund. The PII premium for 2014-15 totalled around £250m.

 

 

 

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