SRA to establish indemnity scheme to replace SIF
The regulator's arrangements will offer consumers the same level of cover as the SIF
The Solicitors Regulation Authority (SRA) has announced it will replace the Solicitors Indemnity Fund (SIF) with SRA-run indemnity arrangements from September 2023. The SRA-run indemnity arrangements will maintain consumer protection for post six-year negligence with the same level of cover as the SIF.
The SIF scheme has been shrouded in controversary in recent years after plans to close the scheme by the SRA were met with concern from members of the profession. The SRA said the decision had been reached following an extensive consultation on the issue and “in-depth consideration… engagement, research, expert advice and insight”.
Anna Bradley, chair of the SRA Board, said: “We have been looking at how best to maintain consumer protection for negligence claims brought more than six years after a firm has closed in a cost-effective and proportionate way and have decided that an SRA-run indemnity scheme is the right way forward.
“This approach will provide that important protection for those who need it, while giving us clear oversight of how the indemnity operates, enabling us to run the scheme efficiently and realise potential cost savings.”
The Law Society has welcomed the announcement. Law Society president, I. Stephanie Boyce, said: “We are pleased the SRA has decided to maintain consumer protection for post six year run off cover (PSYROC) with the same level of cover as the SIF via its own indemnity fund.
“This is likely to be a relief to the many members, and former members, who have been worried that the closure of SIF would mean the ending of PSYROC as a regulatory arrangement, when for most there was little prospect of finding alternative comparable protection on the open market.
Boyce explained: “The SIF was scheduled for closure in 2021. However, following lobbying from the Law Society and other stakeholders, the SRA sought an extension to the fund, so that it would have time to seek views on how to sustainably maintain essential consumer protections and develop a new policy for the future.
“The Law Society called for the establishment of an indemnity scheme, ring-fenced for PSYROC claims and offering the same scope of protection currently provided by the SIF”.
Boyce said that while the Law Society awaited details of the new scheme, it was pleased the SRA Board appeared to have given “due consideration” to the profession’s views.
“Their decision means that consumers will continue to enjoy long-term protections when they employ a solicitor for legal advice”, she added.
“People go to solicitors for support and advice during significant events in their lives – the death or injury of a loved one, family breakdown, a house purchase or estate planning.
“They do so rightly confident that solicitors are highly qualified and regulated. Consumers trust their solicitor is adequately and appropriately insured, and that they will be compensated for any losses on the rare occasion something goes wrong”.
The Law Society president said she wanted to be certain the new scheme will be affordable in the long term, provide “good value for money”, and maintain “the strong protections that have benefited clients and solicitors alike under the SIF.”
The SRA will launch a public consultation, before the end of September, on the arrangements and rules for the SRA-run indemnity scheme.