SRA launches consultation on changes to Compensation Fund
The Solicitors Regulation Authority (SRA) has launched a 12-week consultation on its proposals to change the Compensation Fund.
The proposals include removing the current hardship tests and only allowing applications from people that have been provided, or are a recipient of, a legal service from the solicitor involved.
The regulator is also proposing the introduction of a £500,000 single claim limit and a cap to the total amount payable for a group of related claims.
The SRA also wants to ban claims where an insurance policy has been voided or has already paid out money.
The regulator is seeking views from the profession, public and representative groups on the proposals by 21 April 2020.
The proposals build on feedback provided in responses to a 2018 consultation on both professional indemnity insurance arrangements and how the fund is managed.
SRA Chief Executive Paul Philip said: “The Compensation Fund provides an essential safety net for those who need it, helping to maintain trust in the profession when things go wrong.
“However, funding the scheme comes at a cost, which is borne by the wider profession and ultimately their clients. We have seen how significant risks in the market over recent years, including solicitor involvement in dubious investment schemes, have affected the Fund and contributions from the profession”.
Philip said the proposals are designed to help balance the needs of those who most need it, while reducing the cost to the profession as a whole.
Once finalised, any changes will need to be approved by the SRA Board and Legal Services Board.