Solicitors Regulation Authority (SRA) plans to reduce the minimum level of compulsory professional indemnity insurance (PII) cover for solicitors to £500k in time for this year’s renewals, could be scuppered by the Legal Services Board’s (LSB’s) decision to give itself extra time to consider the proposal.
The SRA’s proposal—which was submitted in July this year—has drawn fierce criticism from stakeholders across the board, with the Law Society, the Legal Services Consumer Panel, Council of Mortgage Lenders and Association of British Insurers all having written to the LSB, urging it to knock back the plan.
Legal Risk LLP partner, Frank Maher—who describes the SRA’s six-week consultation on the issue as “rushed” and claims that the proposed costs savings were based on “flawed reasoning”, which would have adverse consequences for many firms—is claiming the LSB’s decision to extend its consideration period as a “partial victory”.
In a letter to the SRA, the LSB—which has an initial decision period of 28 days under the Legal Services Act 2007—said it was using its option under the Act to extend the consideration period until 10 October 2014. Since most solicitors renew their PII on 1 October, even if the LSB approves the new arrangements, they are unlikely to be introduced until next year at the earliest.
The LSB says it may not use all the additional time it has given itself, but says the issues raised in the application are too complex to assess in the original timeframe.
SRA executive director for policy, Crispin Passmore, says: “The LSB has always had the option of extending its assessment periods and often does so: this is not an unusual move. We made clear in our application to the LSB that a positive decision by the end of August would allow the rules to come into force in time for the 1 October 2014.
“If the LSB does not make a decision in time, or does not approve the rule changes, then the current rules remain in place for those policies that need to be renewed on 1 October. The ball is very much in the court of the LSB, and we will comment further when appropriate.”
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