But we are urging the Solicitors Regulation Authority to remove longer term uncertainty by concluding that cover for lenders should remain integral to solicitors’ standard insurance arrangements.
Lenders rely on solicitors to undertake important mortgage conveyancing work, and therefore welcome the SRA’s decision that for the time being financial institutions will continue to be covered by the minimum requirements of professional indemnity insurance.
Without this safeguard, lenders would be forced to check individual firms’ insurance cover before agreeing to let them undertake conveyancing work on their behalf. That would almost certainly have led to a significant reduction in the number or firms lenders would be prepared to instruct – as well as an increase in costs for consumers.
We also welcome the decision by the SRA to reduce the length of time a solicitor firm can spend in the assigned risks pool, which acts as an ‘insurer of last resort.’ Currently, there is not enough clarity about which firms are in this pool, even though they represent a higher risk to lenders.
We therefore welcome the SRA’s indication that it will look to ensure that information about firms’ insurance arrangements is centrally and publicly available, and we urge it to move speedily to implement this.
We support the ultimate demise of the assigned risks pool as a means of providing qualifying insurance for those solicitor firms that are unable to find it in the open market. It is essential, however, to ensure there are measures in place to guarantee that clients of firms that move to shut down are adequately protected.
It is vital that the interests of solicitors’ clients, including lenders, are protected by adequate insurance, and that there is a transparent, centralised system providing up-to-date and reliable information about the scope of firms’ professional indemnity insurance.
We are encouraged by the SRA’s proposals for improvements to help protect solicitors' clients, and look forward to working with it to minimise the potential for any negative impacts arising from proposed changes in the future.
