'Keep ABSs out of the Compensation Fund', Law Society insists
SRA says review will not be over until end of 2016
The Law Society has repeated its call that ABSs should be kept out of the Compensation Fund until a proper review has been carried out.
The move came as the SRA's financial protection committee meets next week to finalise its plans for the review, which will not begin until 2014 and last for two years.
Des Hudson, chief executive of the society, said it was 'very disappointing' that the LSB and SRA were in favour of removing the 'sunset clause' in the Legal Services Act that would have halted the current arrangements at the end of this year.
An order to remove the clause was laid in parliament last month and is awaiting approval by Lord Chancellor Chris Grayling.
The society argues that the sunset clause should be extended until 31 December 2014, after the review was over, and removing it will put the profession at risk.
Law Society chief executive Desmond Hudson said: 'The Law Society has been calling, for some time, on the SRA to carry out a comprehensive review of the Compensation Fund before it reached any conclusions on the future of current arrangements.
'We welcome the SRA's commitment to conduct a 'root and branch review' in 2014 after it has completed its review of conveyancing practice and the holding client money.
'The review of compensation arrangements must be comprehensive in order to be of any use whatsoever.'
Hudson added that a clear picture of the size and types of firms and work areas that are giving rise to claims on the Fund was essential for the review to be worthwhile.
A spokesman for the SRA said LSB consulted over the summer as to whether the sunset clause should be removed.
'The Law Society disagreed, but the LSB agreed. This means that ABSs for the time being will continue to be part of the Compensation Fund.
'It may that after the review, they will have their own compensation fund.'
The spokesman said three quarters of the firms which had been licensed by the SRA as ABSs were existing law firms which had paid into the Compensation Fund.
He added that the review would take two years.