Insurance change would increase flexibility for firms
The Solicitors Regulation Authority is proposing to introduce a change to the Participating Insurers Agreement (PIA) which would make it is easier for firms to switch their regulator and thus improve competition in the market.
Although the SRA can waive a firm’s obligation to obtain six-years’ run-off cover for its professional indemnity insurance if that firm is moving to another legal service regulator, the PIA still requires run-off cover to be in place. This could prove to be a barrier to switching as firms would need to have dual cover in place.
Following an approach by the Society for Licensed Conveyancers to review the situation and remove the need for cover, when switching regulators, from the agreement the SRA is conducting a consultation on the proposal
Crispin Passmore, Executive Director for Policy, said:
“Firms should be able to switch to the regulator they feel is right for their business more easily than is currently the case. Legal businesses are increasingly owned by, and employ, a range of lawyers and non-lawyers, so choosing a regulator is an important business decision. Facilitating choice is a good way to encourage a modern, competitive market that provides affordable and accessible services.
Waivers can only be given if firms are switching regulator, rather than ceasing to practise entirely. Other regulators have their own indemnity insurance requirements. If changes to the agreement were made, firms would still need to negotiate with their insurer to change the conditions of their policy.
To fnd out more about this consultation, which runs until 14 July, go to www.sra.org.uk/sra/consultations/removing-barriers-switching-regulators.page