News

Compensation fund changes go live

01 July 2021

We announced last year that we would be making changes to the criteria for making an application for a grant from the fund to make sure that it continues to protect the public but also remains as affordable as possible for you and your clients.

The Legal Services Board has now approved our revised changes, and these will come into effect on Monday, 5 July. Hopefully, your clients will not need to access a grant, but it does pay out significant sums each year to those who have lost out because of solicitor dishonesty or a failure to account.

We decided to make the changes following two rounds of consultations with you and consumer groups.

One of the key changes is the management of the potential liability of high-value, connected applications by introducing a capping mechanism of £5 million for multiple, connected claims. This measure would still allow all eligible applicants to receive a reasonable level of redress that compares favourably to other schemes with capping mechanisms.

We will also be excluding charities with a turnover of more than £2m and trusts with assets of more than £2 million from applying to the fund, as they operate in a similar manner to large businesses who are already excluded. It focuses the fund on protecting those that need it the most: individuals, small businesses and charities and trusts where we have removed the additional hurdle of hardship tests.

Paul Philip, SRA Chief Executive, said: ‘The compensation fund provides an important layer of protection for those who need it, helping to maintain trust in the profession when things go wrong and there is no other means of claiming for loss. However, funding the scheme comes at a cost, which is borne by the wider profession and ultimately their clients.

‘The tension between these two issues was a major theme of the feedback we received during both consultations. That is why we deliberated and consulted twice on these proposals, to make sure we strike the right balance. Our changes will support public confidence, give claimants clarity about what the fund can and cannot cover and make sure this valuable additional protection is available in the long term.’