The SRA has been trying to tackle the twin issues of insolvent insurers and increased PII premiums for 'high risk' firms for some time. Having last year dropped their plans to impose a minimum rating requirement on Participating Insurers in the solicitors PII market, they pursued a well publicised, and roundly criticised, approach of seeking to reduce the minimum level of cover to £500,000, amongst a raft of other PII 'reforms', commented on in this column on a number of occasions (see Steve Holland's analysis, and our report on our forum debate on the issue).
The LSB has now twice rejected the main SRA proposals, as reported in the Law Gazette today, while not ruling it out entirely for the future.
They have, however, approved the SRA proposal that firms will require to be able to justify that they hold adequate cover, given the nature of their work. This is something that Lockton has been supportive of, as it clearly assists in protecting the public - the principal reason for the introduction of compulsory PII for professions in the first place.
SRA launches small firms discussion paper
As the SRA seeks to counter allegations that it is 'anti' small firms, having yesterday announced a number of measures to make regulation more proportionate, there is a broad understanding amongst the profession, insurers and brokers, regarding the motivation behind many of the SRA proposals to reform PII. It appears however that the LSB agree that the SRA proposals, so rushed through consultation earlier this year, were too hastily conceived, and would not achieve the intended results.
We hope the SRA will re-engage early with all interested parties as it seeks to resolve the thorny problem of achieving effective, but proportionate regulation - which works for the benefit of both the profession and its clients.
Firms wishing to respond on the SRA Small Firm discussion paper, have until 4th February to respond.