Solicitors Regulation Authority finalises rules for post six-year run-off cover
Board agrees final rules to bring SIF under SRA control
The Solicitors Regulation Authority (SRA) announced on 15 February that its Board has finalised new rules that will bring the Solicitors Indemnity Fund (SIF) within its remit to guarantee consumer protection for post six-year negligence claims.
According to the new rules, post six-year protection will become part of the SRA’s regulatory arrangements and oversight, following the expiry of SIF’s current arrangements on 30 September 2023. The SIF was established by the Law Society of England and Wales in 1987 pursuant to the Solicitors Act 1974, in order to provide compulsory professional indemnity cover to all solicitor practices in England and Wales.
In light of the prospective closure of SIF, and the unavailability of alternative options for long-term run-off cover, the SRA held a consultation in early 2022, to gather stakeholder views on the future of SIF and post six-year run-off cover. Following a review of the responses received, the SRA adapted its initial proposal, which includes updates to the process for when an arbitrator is required.
The SRA’s finalised rules, which will see the new operations and arrangements go live on 1 October 2023, will now be submitted to the Legal Services Board for approval.
According to the SRA, the changes to the arrangements on SIF and post six-year run-off cover will reduce the running costs of the operation, which will result in more funds being available to settle claims. Relatedly, the SRA has also confirmed that it does not expect to levy the profession to obtain more funds for the scheme in the near future. However, a consultation may be needed in future to help the SRA decide on the fund's long-term financial arrangements.
SRA Chief Executive, Paul Philip, said, “Across all the consultations we have run on post six-year cover there has been a consistent theme that both the public and profession value the protections the SIF provides. The SRA-run scheme will provide assurance for all that there is ongoing protection for clients. By running the scheme we can make sure it runs as efficiently and effectively as possible. The feedback we received was useful and we have made some changes in response. Others also questioned whether we had the expertise to run an indemnity scheme, so it's worth clarifying that we will be engaging external experts to help us further develop and then deliver the day-to-day operation of the scheme.”