Conveyancing Firms Benefiting From SRA Run-off Insurance Cover Change
Three firms have taken advantage of the lapsed SRA indemnity insurance run-off requirement by moving from the Solicitor Regulation Authority (SRA) to the Council for Licensed Conveyancers (CLC).
In recent months, conveyancing specialists Fidler & Pepper Lawyers, AV Rillo and Clutton Cox have all made the move to the CLC, citing the specialist regulator as the main reason for moving.
Over the last five years many legal service firms have felt stuck with their regulator; unable to easily transfer to a regulator that may perfectly suit their business.
In the main part, this was due to the indemnity insurance policy run-off requirement all SRA members needed to take out before they could use another regulator.
The minimum six year run-off insurance cover was deemed as a clear barrier to many firms choosing the regulator that will best represent their business because a firm would need to take out duel policies, thus reducing choice, freedom and a fair market. The rule was subsequently lifted in October 2017 and movement between firms has been considerably easier as a result.
Mark Slade, CEO of Fidler & Pepper limited, said: “The move made sense to us as we have become specialist property and private client lawyers and we wanted a regulator that was similarly specialised – in this respect the CLC fit the bill perfectly and have been a pleasure to deal with throughout the process.
“The SRA have a difficult job in that they have to try and regulate everyone from high street sole practitioners to multi-national corporations and everything in between. Bearing this difficulty in mind, we have felt for some time now that it has not been easy for the SRA to proportionately regulate conveyancing-focused firms.
“Whilst it’s taken quite a lot of time and effort, for us it’s really just one more step along the road to achieving our Company’s potential. We know the sort of business we want to be, we know the sort of employer we want to be and having the right regulator that will work with us going forward is one more important piece in the puzzle.”
The CLC have commented in their Annual Report 2017: “2017 saw major regulatory changes made which can help reduce the cost of firms transferring between legal sector regulators. The CLC’s regime will be of interest to firms currently under other regulation that specialise in conveyancing and/or probate work. A number of such firms have indicated a desire to transfer into CLC regulation.
“The CLC is pleased that the SRA has decided to remove a barrier that has prevented lawyers from exercising their right to choose the most appropriate regulator for their business.
“The freedom to choose regulator was created by the Legal Services Act 2007 but was not a practical option for SRA-regulated firms because of the SRA’s requirement that a firm transferring to another regulator should take out run-off professional indemnity insurance cover as if it was closing. This made transfer between regulators prohibitively expensive.”
Crispin Passmore, SRA Executive Director, Policy, said: “There was overall support for our proposals to remove the obligation for run-off cover if a firm switches regulator.
“The current approach makes it difficult for firms to be able to switch to the regulator they feel is right for their business. This change would give firms that choice, encouraging a modern, competitive market that provides affordable and accessible services for the public and businesses.
“We recognise that although such a change could have benefits for consumers, there are potential risks around protections for clients. We are therefore working closely with the other legal regulators on a switching protocol. This is to make sure consumers remain protected and the new regulator has all the information they need to establish the transferring firm has adequate cover including for past activities. The way we are proceeding provides a clear, straightforward approach to making sure appropriate consumer protections are in place.”
As price and service transparency draws closer and the legal sector prepares for huge reform, choosing a regulator that will work in the best interests of the legal service firm is becoming increasingly important.
Now that movement between regulators is easier, it would seem that more firms are taking advantage.
Has your firm moved regulators or is currently moving regulators? How difficult have you found the process? How important is choosing a legal service regulator in the continued success of a firm?