£90 per solicitor
The Solicitors Regulation Authority (SRA) is set to more than triple solicitor and law firm compensation fund contributions following signifiant costs arising from the Axiom Ince scandal.
The regulator has launched a public consultation on its 2024-25 business plan and budget, which includes raising individual contributions, paid by solicitors, from £30 to £90, and boosting firm contributions from £660 up to £2,220.
“This will allow fund reserves, significantly impacted by a substantial increase in the number of interventions and volume of claims over the past 18 months, to be rebuilt over the next two to three years,” the regulator explained.
“The proposed compensation fund contributions have been set taking account of the principles of the fund, in particular maintaining the viability of the fund while making contributions as manageable as possible,” it added.
Continuing its justification of the increases, the SRA maintained that it “has taken steps to smooth impacts over several years and keep the rise in contributions to the minimum required to ensure the fund can meet current and future needs”.
Paul Philip, chief executive of the SRA, commented:
“The SRA Compensation Fund plays a critical role in protecting the public and maintaining trust in the profession. We have a duty to ensure the fund is maintained and remains viable. This proposed rise has been driven by an unprecedented level and cost of claims and interventions in the last year. We have done all we can to make sure the contributions don’t rise any more than they absolutely have to.”
Legal Cheek reported extensively last year on the Axiom Ince fiasco, in which the firm was shut down after £64 million went missing from the client account. In November, it was revealed that former clients were seeking approximately £30 million in compensation, but the available compensation fund amounted to only £18 million
Adding his view on the latest increase, Ian Jeffery, The Law Society’s chief executive officer said:
“The Compensation Fund provides crucial protection and reassurance to consumers in contrast to the lack of protections offered by unregulated providers. Professions can only succeed if they uphold core values, such as integrity, reliability and accountability. On the rare occasions when our professional colleagues fail to uphold these values, our collective responsibility means that public faith is maintained.”
“It is unfortunate that there have been such significant failings that we now face substantial increases in the individual and firm contributions to the Compensation Fund,” Jeffery continued. “It underlines the need for greater vigilance and probity on the part of our members and a focus on effectiveness by regulators.”
“Ultimately, we accept that the role of solicitors is to protect the interests of their clients, and that we must do that, even when the costs are high, because the costs of not doing so would inevitably be higher,” he added.
The individual contributions last reached £90 in 2018-2019, with firm contributions at the time sitting at £1,680.
