On the 23rd March 2018, the SRA opened a consultation, titled: Protecting the users of the legal services: balancing cost and access to legal services. At the heart of the topic was the question of the correct level of consumer protection when using a solicitor or law firm, and whether changes could be made that would still offer adequate protection but in turn produce a more competitive and populous marketplace. When the consultation opened, the SRA can be quoted as follows “Our PII proposals will give firms more flexibility to choose the right level of insurance to suit their business and clients.” These comments and suggested reforms to PII generated strong opinions both in support and in challenge. The consultation closed on the 15th June and many have been waiting for the outcome.
This of course wasn't the first time in recent years that the SRA have looked to make changes to PII arrangements, and there were noticeable differences within this consultation compared to that presented in 2014. In regards to the 2018 consultation, putting changes to the compensation fund aside, in respect of PII reform, the SRA suggested the following key changes:
Reduction in the minimum limit requirement- £500,000 for all firms, but a requirement of £1,000,000 for those undertaking conveyancing work)
Removing the requirement for SRA minimum terms and conditions coverage to include cover for financial institutions, corporate and other large business clients
Run-off minimum limits reducing, a requirement of 3M in total (rather than each claim) for those firms who undertook conveyance and a 1.5M total limit for all other firms
At Lockton we gave much consideration to the SRA proposals and made clear our thoughts on the consultation, for greater detail on this please see our article of earlier this year - SRA Consultation, leave well enough alone.
We're pleased to learn that during the SRA compliance conference in Birmingham last week, SRA Chief Executive Paul Philip advised the media that in respect of PII reforms, there is “no commitment at the moment to doing anything”. We felt that the majority of the changes proposed would not help but rather hinder the legal profession in England and Wales. Observations from a number of stakeholders since Mr Philip's announcement seem to be consistent in that no change will now occur in respect of the PII suggested reforms within the consultation, however there is no formal confirmation of this to date.
It appears the SRA are focussing their resource and energies on the other key facet of the consultation- the compensation fund. We continue to monitor developments in respect of this matter. Once we are aware of what the SRA decide to implement, we will share what (if any) impact this may have to the legal profession from a business risk perspective.