The Solicitors Regulation Authority (SRA) has responded to the Legal Services Board (LSB) since they published their warning notice relating to the SRA’s application to alter the Indemnity Insurance Rules by reducing the compulsory minimum level of cover to £500’000.
The SRA originally put forward the proposal on the 15th of July 2014 and the LSB extended their initial decision period from 28 days to 90 days, ending in October 2014.
From this notice, the SRA has provided the LSB with further information to support their application and also a further extension on the initial period for the LSB to consider the application.
Subsequently, the SRA has announced that the changes proposed will now not come into effect before October 2014 — the date when most regulated firms must renew their annual PII cover.
Charles Plant, Chair of the SRA Board has commented ‘’we are obviously disappointed that the LSB has issued the warning notice today. The immediate impact is that the changes we have proposed in relation to reductions in mandatory cover cannot now take effect in October this year.’’
He also added ‘’I think this is the wrong decision and we remain convinced of the case for changing the arrangements for professional indemnity insurance, in order to deliver benefits for solicitors and consumers alike. We will, therefore, continue to develop our proposals on this issue.”
This means that the 2013 Indemnity Insurance Rules and minimum terms and conditions will remain in force for the October 2014 renewal.
Following this, the Law Society has advised firms not to delay their applications to renew PII this year in order to avoid a last minute rush when capacity may be limited.
Andrew Caplan, President of the Law Society has urged solicitors to renew PII as soon as possible:
‘’Our strong recommendation to solicitors is that they should make their arrangements for PII for October 2014 as soon as practicable.’’
“We share the SRA’s desire for better and targeted regulation and we look forward to working with the SRA, lenders and insurance industry to find a way forward which will ultimately benefit consumers and smaller law firms. There is a need for a debate about the balance between competition and consumer protection. And not least the decision of the LSB to allow ICEAW licensed accountants to operate without comparable PII obligations.”
The notice from the LSB relates to the application from the SRA and can be read here:http://www.legalservicesboard.org.uk/Projects/statutory_decision_making/current_applications.htm
