SRA hits back in row over uninsured firms
The SRA has hit back after the Law Society attacked the regulator's plans to make the Compensation Fund pay for claims against uninsured law firms.
Antony Townsend, chief executive of the SRA, described as “wholly untenable” the society’s argument that transferring cover from the assigned risks pool (ARP) to the Compensation Fund would be a “costly burden” on the profession.
The ARP is to close from September 2013, after a year in which the pool will be jointly funded by solicitors and the insurance industry. Under the plans, the fund would pay compensation to clients with claims against firms which were not insured from 1 October 2013. Townsend said the profession already met the cost of these claims through insurance premiums.
“As the society well knows, the ARP is to end after 2012/13,” he said. “The society’s proposal would result in further increased cost to the profession as it would require the maintenance of the operational underpinnings of the ARP to manage and apportion the cost of claims between insurers for a very small value of claims in any one year.
“In the 2010 indemnity year claims were received in respect of just 14 uninsured firms with a total estimated cost of £350,000.”
Calling on the LSB to block the move, Des Hudson, chief executive, said: “The SRA’s proposal to transfer cover for uninsured firms to the Compensation Fund would be a costly burden on the profession. It is quite wrong to make a change of this sort without full consultation and a detailed impact assessment.
“We urge the Legal Service Board to reject the proposals, and to insist on full consultation.”
In a separate development, the SRA has said that, in response to requests from firms, it would publish the credit rating of insurers.
The changes will be discussed at the SRA’s board meeting next month.