SRA advises uninsured firms of next steps
The Solicitors Regulation Authority (SRA) has advised of the next steps for firms that have failed to secure a new professional indemnity insurance policy.
The 141 firms that are still in their extended policy period (EPP) having failed to obtain cover by the 1 October deadline, have been written to the SRA.
The period lasts for 90 days, and once firms have entered the last 60 of these (the cessation period), they cannot take on any new instructions, and must also look at closing down at the end of the period if they do not find an insurer.
The SRA was notified by 277 firms that they needed to enter the EPP, and so far 136 have secured a new policy.
The SRA has already been talking to the firms within the EPP to ascertain their position, and on Friday it wrote to them all to outline what should happen next.
The letter reiterated the firms’ obligations and responsibilities, and that an SRA Supervisor would work with them to draw up a plan for complying with guidance, should they need to wind down their practice.
Mike Haley, SRA Director of Supervision, said: "We’ve written to all those firms that we believe have not secured insurance so that they know exactly what they will have to do between now and 29 December.
“We’re aware of the different plans some of them have, such as merging with another firm or selling their business, but all need to know that when the EPP ends, they will no longer have insurance and therefore will not be able to undertake any reserved legal activities.
"Of course, it could be that these firms do secure a new policy between now and 29 December, and nearly half of those who entered the EPP have done just that. But there is a danger that firms do not plan for the worst, and that could put their clients’ interest at risk, meaning we would have to step in.
"That is something we are keen to avoid as there is disruption for clients and an associated cost for the profession."
Further information on professional indemnity insurance for solicitors is available here.