After intensive lobbying led by the Law Society the SRA announced today that its Board had concluded that the previous decision to close SIF was to be temporarily reversed for the next 12 months whilst all options were considered for the future .
The SRA recognised the changed enviroment and that the insurance market had "hardened " such that affordable cover was unlikely to be secured . In fact the Law Society pointed out that in fact there was no real alternative to SIF available in the market
This had been a focus of considerable concern and a session of the Law Society Council allowed the Society to hear concerns from across the Country together with an update over the extensive work the Society was undertaking to address the issue for members . The net result of that action was todays announcement by the SRA .
SRA board chair Anna Bradley said: ‘The board welcomes the keen interest that is now being shown by the profession and others in SIF. But it is disappointing that this came so late in the day and as a result is set against the backdrop of significant concerns about the future viability of SIF.
‘There is now limited time available to look at what are complex matters around whether there is, in principle, a regulatory place for post six-year run-off cover. We will need to give careful consideration to finding the right regulatory balance between consumer protection and issues of proportionality, affordability and the wider public interest.’
The SRA says the extension will allow for work to agree a long-term position on whether there is a place for post six-year cover in its regulatory arrangements.
This will include reviewing comparable run-off cover arrangements, claims patterns, impact assessments and ultimately winding up the SIF if appropriate .
Law Society president, I. Stephanie Boyce, said: 'We are pleased the SRA has heard the many reservations expressed by us and others about the closure of the SIF and has now removed the risk of imminent SIF closure at a time when no viable alternative is available.
'We have been raising our concerns with the SRA, the regulator for this issue, for more than three years. We are pleased they are now taking steps to find an effective solution and undertake the detailed analysis required to assess the future of post six-year cover.
'The SRA has accepted, as an important element of consumer protection, it is a problem that it, as regulator, must solve. But it is not enough simply to delay closure again in the hope that next year the commercial indemnity insurance market will change and fill the gap in consumer protection that SIF closure will create. The SRA must move quickly to publish its consultation on future options and put a plan in place.
'We urge the SRA to work hand in hand with the Law Society, the insurance industry and others to find a long-term solution to the problem of run-off indemnity cover. It needs to show imagination in looking at long-term solutions that provide proper levels of consumer protection and do not expose solicitors to ruinous claims or consumers to potentially lengthy and complex litigation.'