Conveyancing firms have been considering a regulatory switch away from the SRA in order to reduce the costs associated with professional indemnity insurance policies.
Statistics show that professional liability insurance claims from conveyancing represent 50 per cent of all claims by value – with half of these made by lenders. The conveyancing process that causes these losses must also be up for a fundamental review and should undergo a thorough investigation. This was the recommendation made by an independent report by Charles Rivers Associates (CRA) which was commissioned by the SRA last year.
CRA estimates that 30 to 60 per cent of firms in England and Wales may seek to buy back this business insurance cover. On the basis that 64 per cent of the profession currently undertake residential work, this could mean that half of firms will no longer have the cover and will consequently have to stop doing conveyancing work.
The cost of buying this cover back may well result in higher costs for the consumer. On the other hand, if the cost is absorbed by the partners this could cause confrontation between different departments which might drive struggling firms to break up.
One of the consequences of this restriction in cover may be a move by some firms of solicitors to change their regulator from the SRA to the Council of Licensed Conveyancers (CLC).
There is no such restriction in cover for licensed conveyancers who arrange their professional indemnity through the CLC scheme. Solicitors looking to retain their work with lenders may well shift their conveyancing business into a separately regulated firm. Only those firms thinking and planning ahead that have their wits about them will survive in this constantly changing environment.