SRA launches consultation on compensation fund changes

The Solicitors Regulation Authority has launched a consultation on “reforms to the compensation fund arrangements”. The consultation builds on the conclusions of the past consultation on compensation, covered here in 2018. Changes have been made based on the feedback given, including introducing a maximum cap on related claims and dropping proposals for the introduction of a hardship test.

Paul Philip, SRA Chief Executive said: “We want to strike the right balance between protecting clients’ money and making sure that the Fund remains sustainable for the future. We think the proposals we are consulting on find that balance, but we want to hear the views of all those involved.”

Proposals include:

  • Focusing eligibility criteria on people that need most protection and removing the current hardship tests
  • Only allowing applications from people that have been provided or are a recipient of a legal service from the solicitor involved
  • Reducing the single claim limit to £500,000, and being clearer about how to apply this limit
  • Capping the total amount payable for a group of related claims
  • No longer allowing claims where an insurance policy has been voided or has already paid out money

The full details of the SRA’s conclusions from the past consultation are available here.

Details of the current consultation, including submission instructions, the proposed rules and further evidence are available here.

Consultation response submission deadline: 21 April 2020. 

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