Decision is ‘misguided’ and ‘increases risks to consumers’
The ABI has rounded on the Solicitors Regulation Authority (SRA)’s decision to reduce the minimum level of mandatory solicitors’ professional indemnity insurance (PII) cover, branding it “misguided”.
ABI head of liability insurance James Dalton said: “Reducing the minimum level of PII cover for solicitors does not change the risk profile of the firm and only increases the risks to consumers if things go wrong.
“Consumers will end up paying the price because the SRA thinks solicitors should save money rather than protect consumers. The SRA is misguided in thinking that lowering the limit will lead to a meaningful reduction in premiums for small firms.”
Dalton said the SRA has not yet made a final decision on whether customers who are “failed” by the lower PII limit will be able to claim from the association’s compensation fund.
The fund is designed to repay client money that a solicitor has lost or failed to account for. It is funded by a levy on solicitors who hold client money.
Dalton said that if clients affected by the PII decision can claim on the fund, “this will result in an increased levy on those firms who make prudent and sensible arrangements for their own PII cover.”
He added: “The Legal Services Board needs to ask itself whether the SRA’s proposals are a good outcome either for the legal profession or, more importantly, the profession’s customers.”