LSB rejects PII reduction proposal
The Legal Services Board (LSB) published its decision on the Solicitors Regulation Authority (SRA) application, which proposed changes to regulatory arrangements relating to professional indemnity insurance (PII) cover.
Although the LSB decided to approve that part of the application relating to the introduction of a new outcome in the SRA’s Code of Conduct 2011 requiring firms to assess and purchase an appropriate level of professional indemnity insurance and further technical amendments to the SRA’s regulatory arrangements including amendments to the SRA Glossary, it refused the part of the application which proposed a reduction in the minimum level of PII cover from the current level of £2 million (£3 million for incorporated firms and LLPs) to £500,000.
Legal Services Board Chief Executive, Chris Kenny, said:
“We welcome the SRA’s decision to comprehensively review financial protection arrangements and expect that it will reflect the outcome of this application in its further work. What matters is that firms have the right incentives to assess their risks accurately and so ensure that consumers are protected. It is not clear to the Board that a minimum level of cover necessarily has a place in achieving that and we were certainly not persuaded by the evidence put forward for the figures proposed.”