Hundreds of law firms could be struck off residential conveyancing panels under Solicitors Regulation Authority (SRA) proposals, the Law Society has warned.
The Law Society took aim at the SRA over its “possibly highly risky” proposals for regulatory reform.
The wide-ranging SRA proposals, set out in a quartet of consultations on 7 May, affect solicitors’ indemnity insurance, the compensation fund, multi-disciplinary practices and accountants reports. They include lowering the level of professional indemnity insurance (PII) cover required to £550,000 coupled with a requirement to demonstrate that the firm has sufficient cover in place to protect clients, and reducing run-off to three years.
Law Society chief executive Desmond Hudson says: “To use the example of PII from the very many consultation proposals, firms, insurers and brokers will simply have insufficient time to adjust their businesses in time for the 1 October implementation which could mean that no cover will be provided for lenders in residential house transactions. Yet these changes could see the immediate removal from panels of hundreds of firms.”
Hudson says the proposals have raised expectations among some firms that they would benefit from cuts in PII premiums and fewer reporting obligations. He argued that six weeks was too short for the consultation.
“The lending institutions have already made clear that if the removal of client protections proposals go ahead, lenders will act swiftly to minimise their exposure to risk,” he says.
“More time needs to be given to allow the market to produce new insurance products and to educate firms and consumers.”
