The Solicitors’ Regulation Authority (SRA) has confirmed that for the time being it will retain financial institutions’ protection under solicitors’ compulsory professional indemnity insurance minimum requirements.
The Council of Mortgage Lenders (CML) has responded with the hope that over time the SRA will conclude that such cover should continue to remain integral to standard insurance arrangements.
The lender body says that if this protection had been removed, lenders would not be able to rely on the standard insurance to protect them as the clients of solicitors undertaking mortgage conveyancing work. Lenders would then be forced to check the exact scope of each firm’s cover before agreeing to allow them to undertake work on their behalf, which would be likely to result in a significant reduction in the number of firms lenders would be prepared to instruct, as well as an increase in the costs that would need to be borne by consumers.
The CML also welcomes the SRA’s decision to reduce the length of time a firm can spend in the Assigned Risks Pool (ARP), which currently acts as ‘insurer of last resort’. It says that firms in the ARP represent a higher risk to lenders, but there is little transparency about which firms are in the ARP. The CML therefore particularly welcomes the SRA’s move to ensure that information about firms’ insurance cover is centrally and publicly available, and urges the SRA to move speedily to implement this.
The CML supports an ultimate end to the role of the ARP in providing qualifying insurance for those solicitor firms unable to find it in the open market, but says it is essential that measures are put in place to ensure that clients of firms which move to shut down are adequately protected.
Jackie Bennett, CML head of policy, said: “We welcome the retention of lender protection within minimum insurance terms and conditions in the short term
