SRA reveals plans for Compensation Fund review
'Landscaping' phase has already started
The SRA has outlined its plans for reviewing the solicitors’ Compensation Fund.
The Law Society lost its battle with the SRA at the end of last year over a ‘sunset clause’ in the Legal Services Act, which the society could have used to exclude ABSs from the fund if had disagreed with the outcome of the review.
Among the issues the review will consider is whether ‘different arrangements are needed for different service providers’.
The regulator said it would also look at whether entitlement to compensation ‘should be limited in any way’, how contributions are calculated and whether there are any gaps in client protection.
The SRA promised to review the impact of the introduction of ABSs and warned that any changes to compensation arrangements might need the approval of parliament.
Helen Herniman, the SRA’s director of post-enforcement, said: “We are the only frontline regulator that operates such immediate compensation arrangements and solicitors should take pride in the fact that they contribute to such a fund.
“The majority of solicitors carry out their duties involving client money with the integrity expected, but unfortunately there’s a small percentage which doesn’t and they present a great risk to the public.”
A spokesman for the SRA added that the ‘landscaping’ phase of the review was already under way, and would go on until the spring.
This would include analysis of the current compensation arrangements, the arrangements in other parts of the world and of other professions and a “search for innovative ideas about how compensation arrangements could look in the future”.
The spokesman said the ‘research phase’, from spring 2013 to spring 2104, would involve gathering information about stakeholders’ experience of the current compensation arrangements using questionnaires and interviews.
Research would be followed by a consultation and final report, scheduled for the summer and autumn of 2014.