SRA reviewing professional indemnity insurance arrangements

In recent news, the Solicitors Regulation Authority is currently conducting a review on professional indemnity insurance for solicitors.

In particular the SRA is in the midst of reviewing arrangements for professional liability insurance and compensation in the event that a solicitor ceases practising law after a result of fraud or negligence.

While the review is currently in its initial stages, indications have been made that the standardised regulatory minimums for solicitors’ business liability insurance may undergo changes.  Additionally there is the potentiality that such changes will decline to include insurance cover for loan providers acting as commercial clients.

Such a change would free solicitors by giving them the option to choose whether to take out separate professional indemnity insurance cover in the event of a potential loss by such a loan provider.

The Council of Mortgage Lenders commented on the possibility by stating that it has an expectation for loan providers to require effective insurance if they aim to retain any conveyancing firms they may have on their panels.

The CML added that loan providers will in turn be more demanding in regards to the transparency of insurance arrangements made by firms, in addition to taking a more active supervisory role in activity monitoring to safeguard against firms having inadequate professional indemnity insurance to cover any risks.

After a consultation exercise that will span a three month period, the SRA has plans to publish a paper on their results this coming December.  This publication will potentially restructure many conveyancing solicitor arrangements in both Wales and England.

The Authority stated that since solicitors are responsible for releasing, holding, and transferring funds, loan providers run the risk of being defrauded by any unscrupulous practitioner that does not pass any mortgage funds once collected.

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