Bradley: Access to data
The board of the Solicitors Regulation Authority (SRA) has agreed the final version of the rules for its in-house successor to the Solicitors Indemnity Fund (SIF), which is due to begin work on 1 October this year.
The SRA said it did not expect to seek more funding for the scheme through a levy on the profession, at least “in the near future”.
The SIF covers solicitors against claims made after the six-year period of run-off cover ends. Last year, despite widespread support for retaining it, the SRA decided to replace it with an in-house operation.
Speaking to the media yesterday following the board meeting at which the rules were approved, SRA chair Anna Bradley said that, as well as anticipated costs savings, the main benefit of the move would be giving the regulator access to the data it needed to understand how the scheme worked in practice.
Chief executive Paul Phillip said the SRA had only “limited access” to historic claims data and declined to explain why this was when pressed by Legal Futures, saying it was a matter for SIF.
The board agreed that two changes should be made to the draft rules for the new scheme, both proposed by the Law Society.
Where a dispute about whether a claim is within the scope of the indemnity scheme is referred to a sole arbitrator, the draft rules said the arbitrator would be chosen by the SRA.
This has been changed so the SRA will invite an independent body to make the appointment, such as the Chartered Institute of Arbitrators or Centre for Effective Dispute Resolution.
A paper before the board said the arbitration mechanism was “very rarely used”, but the change was made to “provide greater reassurance that any appointment of an arbitrator will be fair”.
The SRA had also proposed having the final say on what to do with any residual surplus on termination of the fund, which currently rests with the Law Society.
Under the final rules, if the SRA cannot identify “an alternative indemnification purpose” for the residual funds, they will be transferred to the Law Society to determine how they will be used for the benefit of the profession.
The rules will now be submitted to the Legal Services Board for approval.
“The changes will make post six-year protection part of the SRA’s regulatory arrangements and make sure appropriate oversight and governance of the scheme,” the paper said.
“The changes will also reduce SIF’s running costs, meaning more money will be available for the fund’s core purpose of settling claims.”
The SRA has said it did “not expect to levy the profession to obtain more funds for the scheme in the near future”, though it might “at a later date need to consult on options for the fund’s long-term financial arrangements”.
Though the Law Society had backed closing the SIF, the group of five powerful local law societies – Birmingham, Bristol, Leeds, Liverpool and Manchester – argued for it to continue.
However, the SRA said in an analysis of the responses that only six of the 45 organisations and individuals responding to the consultation made “overall negative comments”, as opposed to “overall positive comments”.
Some respondents, such as the Yorkshire Union of Law Societies, were “concerned that information provided to us for the purpose of the indemnity might then be used for regulatory investigations”.
Paul Philip, chief executive of the SRA, commented: “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.”
On the question of whether the SRA had the expertise to run an indemnity scheme, Mr Philip said it was “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”.
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