FEATURE
Continued from previous page Accordingly, in March 2021, the Law Society wrote to the SRA asking them to fully explain, in accordance with the requirements of the LSA, why they have made the decision to close SIF. The SRA responded in early May and failed to deal with the request. The TLS wrote again in forceful terms, asking them to properly and fully answer questions posed and to give detailed reasons for their decision. The SRA will consider its response at its meeting on 08 June 2021. In the meantime, TLS repeated the request that they delay the closure of SIF. In addition to this, TLS had a meeting with the LSB consumer panel to appraise them of the imminent closure of the SIF. They were horrified, as would be expected, and indicated they would raise this with the LSB and with the SRA. A few weeks ago, I. Stephanie Boyce, our President, had a follow up meeting with the LSB Consumer Panel, and as a result a joint letter was prepared and sent to the SRA setting out the joint concerns for consumers and for members and requesting the closure of SIF be put on hold. In recent weeks high level conversations took place with the LSB who are now taking an active interest in our concerns and a three-way meeting between the LSB, the SRA and the TLS took place on 26th May 2021. TLS emphasised the impact of closing SIF on members and consumers. They made it clear that there must be an extension in the short term to allow a solution to be identified and created. Both the SRA and the LSB have confirmed that they have been receiving direct contact from many concerned members. The LSB set out how they believe affordability should be defined and that the SRA should take this on board and discuss with their Board. The SRA considered its response at its meeting on 08 June 2021 and announced on 15 June that it would extend the period for another 12 months. 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 day1 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 latest 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 and its attention will now turn to reviewing comparable run-off cover arrangements, claims patterns, impact assessments and ultimately winding up the SIF. The SRA have also said it will consult on its next steps, including alternative indemnity and discretionary uses for any residual surplus in the SIF, for example a hardship fund. The SIF had net assets of £22.48m at 31 October 2020, with around 200 cases ongoing.
Perhaps we should commission our own research to look at the potential impact on the retired, those to be retired in the future, and their clients to put a more human face on the issues rather than treating the issue as an actuarial consideration? Some would say there is nothing that TLS or the market can ever offer that is better than a scheme underwritten by the whole profession. Others would say, as they did when the profession voted to have a market led approach to PII, that they are carrying the burden for SME’s and sole practitioners. Some solicitors may not see direct benefit to themselves from an extension - an issue already raised in Council that will no doubt be supported by a section of the profession. The SRA has the power to levy for any shortfall in SIF at any time. COMMUNICATIONS AND CHALLENGES Meetings have taken place with interested groups to appraise them of what is going on. There has been publicity through the Gazette and direct communications with local law societies going on over the last 12-18 months and this has considerably ramped up over the last few months. One of the challenges is making direct contact with retired members. Sadly, neither TLS nor the SRA have data for membership going back more than about six or seven years. Trying to make contact with firms and members who closed down since 2000 has been extremely challenging. WHAT CAN YOU DO TO ASSIST? Firstly, assist with getting the message out, especially to retired members, possibly through your contacts. Think about those of your colleagues who have retired and/or closed a practice since 2000. If there is still a way to contact them, please do so. Secondly, if you come across any, please clarify the many misconceptions that are flying around. Thirdly, encourage colleagues whether retired or not to write to the SRA and the LSB expressing their concerns at the closure of SIF, emphasising particularly that it is a client protection issue although the protection of solicitors is important as well. Meanwhile TLS are: ■ putting substantial efforts into finding a solution; ■ continuing substantial efforts to try to find a market solution to fill the gap if SIF does eventually close; ■ ramping up the communications to members and any retired members known to them. Although there is no solution at the present time, TLS and the Council remain hopeful that one will be found. I am hopeful that there will be one or more solution that we will be able to offer to our members, but, at this time, those are not certain or detailed enough to be made public. We owe a great debt to the many who have been and continue to be engaged trying to find a solution to this problem. Let each of us join them with our own personal contribution. ■
Alastair Logan
Law Society Council Member for Surrey
So, all in all their decision is not a victory but a reprieve. We do not know the scope of the research that the SRA is carrying out on affordability, and we need to assess whether there is anything TLS can offer to supplement this research.
20 | SURREYLAWYER
1. In fact, this issue has been ongoing for the last 9 years with constant contact and communication by The Law Society with the SRA and this statement is therefore inaccurate.