Closure of the Solicitors Indemnity Fund

I have previously written in Today’s Conveyancer about the SRA’s proposed closure of the Solicitors Indemnity Fund. If the SRA are not persuaded of the need to retain SIF, then it will close in September 2022.

The SRA’s consultation period on the closure of SIF ends on 15th February. It is crucial therefore that as many people and organisations as possible respond to the consultation, hopefully in support of the retention of SIF.

You do not have to be a solicitor to respond. Other bodies or individuals, especially those supporting consumers, will have an interest in the subject. It is the SRA’s function to uphold the positions of consumers in relation to the supply of legal services.

Just to recap, the purpose of SIF is to provide a fund for claims which may be made against solicitors after their six-year run-off insurance cover has expired but they still remain at risk of claims because of the provisions of the Limitation Act. They may be retired or still practising, either as employees or partners. Some may have had their practices taken over by another firm whose insurers didn’t assume responsibility for the earlier firm’s later negligence claims therefore they had to take out run-off insurance.

It is part of the SRA’s argument to close SIF that a majority of the post-six-year claims arise from conveyancing matters (74%). Wills, trust and probate make up 11%.

The likelihood of conveyancing claims has been increased, in my view, by the recent failure of the House of Commons to pass an amendment to the Leasehold Reform Bill which would see ground rents removed for all existing leasehold properties. As a result, the Bill will only restrict ground rents to a peppercorn in the case of new leases, and of course that itself has yet to be passed.

In recent years, conveyancers have been dogged by aggressive developers with aggressive solicitors and impossible deadlines leading to clients purchasing new flats being forced to accept high ground rents with provisions for increases which may result in the properties being or becoming unmortgageable and unsaleable. If the law is not changed to render these ground rents illegal, then solicitors remain at risk of claims arising from them, some of which may be post-six years from the cessation of practices.

This is just one area in which PSYROC may well be called upon by consumers trapped in homes they cannot sell.

The same applies to the many houses sold quite unnecessarily with leasehold titles which buyers and their solicitors have been forced to accept, scared into accepting, otherwise the buyers, having paid deposits and already expended a substantial amount in costs, would have lost the properties.

I give below the link to the SRA consultation which has a number of documents at the foot including the consultation questions themselves.

https://www.sra.org.uk/sra/consultations/consultation-listing/solicitors-indemnity-fund/?s=o

I urge you to download the documents and respond to the consultation before the deadline of 15th February.

The email address to send your response to is:

postsixyear@sra.org.uk

If you are a solicitor, do not forget to state your SRA number. It may seem an obvious point, but anyone responding should state their name and address and profession/job or former profession/job. Anonymous or semi-anonymous responses are not going carry any weight.

If you do not want your response to be published, you should say so.

The SRA consultation documentation and analyses provided are lengthy, nonetheless if you do not have access to any assistance in preparing your response, you can state your views in simple terms.

As to the points you may wish to make in your response, it may assist you to look at the Law Society’s template posted on their website dated 3rd February, though a more detailed draft response is still awaited at the time of writing this article. The template can be downloaded at:

https://www.lawsociety.org.uk/topics/professional-indemnity-insurance/sra-sif-psyroc-consultation-template-response

Gill Mather, retired solicitor formerly practising as Mather & Co Solicitors.

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