SRA makes long-awaited announcement on future of SIF

The Solicitors Regulation Authority has established an SRA-run indemnity scheme meaning that existing Solicitors Indemnity Fund arrangements, as operated by the Solicitors Indemnity Fund Limited (SIFL), will be replaced with SRA-run indemnity arrangements from September 2023.

The decision to introduce SRA-run indemnity arrangements, which will maintain consumer protection for post six-year negligence as a regulatory arrangement – with the same level of cover as the SIF – follows the Board’s in-depth consideration of the evidence and feedback from extensive consultation and engagement, research, expert advice and insight.

The news comes after the SRA proposed the fund be closed, but welcomed feedback from stakeholders. The overwhelming response was for the fund to remain open.

The SRA published a paper on the 3rd of August suggesting that the two main options were either to retain SIF with changes to reduce operating costs or replace it with “a new consumer protection arrangement within the SRA”.

Gill Mather, who formerly practiced for Mather & Co Solicitors, commented:

“The basic fact is that, although reducing SIF’s operating costs is desirable, there is no reason at all to close SIF. SIF has significant reserves and the level of retained funds has hardly moved in 20 years. A report commissioned by the Sole Practitioners’ Group this year found that there is little doubt that SIF can continue for some time to come without the need for additional funds.”

Anna Bradley, Chair of the SRA Board, said:

“We have been looking at how best to maintain consumer protection for negligence claims brought more than six years after a firm has closed in a cost-effective and proportionate way and have decided that an SRA-run indemnity scheme is the right way forward.

This approach will provide that important protection for those who need it, while giving us clear oversight of how the indemnity operates, enabling us to run the scheme efficiently and realise potential cost savings.”

I. Stephanie Boyce, President of the Law Society stated:

“We are pleased the SRA has decided to maintain consumer protection for post six year run off cover (PSYROC) with the same level of cover as the SIF via its own indemnity fund.

This is likely to be a relief to the many members, and former members, who have been worried that the closure of SIF would mean the ending of PSYROC as a regulatory arrangement, when for most there was little prospect of finding alternative comparable protection on the open market.

The SIF was scheduled for closure in 2021. However, following lobbying from the Law Society and other stakeholders, the SRA sought an extension to the fund, so that it would have time to seek views on how to sustainably maintain essential consumer protections and develop a new policy for the future.

The Law Society called for the establishment of an indemnity scheme, ring-fenced for PSYROC claims and offering the same scope of protection currently provided by the SIF.

While we await the details of the new scheme, we are pleased to see that the SRA Board appears to have given due consideration to the profession’s views on this important matter.”

The SRA will launch another public consultation, before the end of September, on the arrangements and rules for the SRA-run indemnity scheme.