In a discussion paper issued yesterday, the regulator also revived an idea first consulted on last year to remove the compulsory requirement for insurance for more sophisticated clients, in particular in the conveyancing market.
The paper is the latest stage in the SRA’s review of client protection and will lead to a consultation in early 2016, ahead of possible implementation in October 2016.
Last year the Legal Services Board rejected the SRA’s proposal to reduce the level of compulsory cover to £500,000 on any one claim, saying it was not backed up by enough evidence. “What matters is that firms have the right incentives to assess their risks accurately and so ensure that consumers are protected,” it said. “It is not clear to the board that a minimum level of cover necessarily has a place in achieving that.”
The SRA paper followed this up: “Now we have the new outcome in the code of conduct requiring firms to assess and purchase an appropriate level of PII cover, one option might be to have no minimum limit. This would maximise the opportunities for firms to negotiate limits most appropriate to their business activities with the associated reductions in cost benefiting consumers…
“We believe that any such change would be best combined with requirements to make information available to consumers so prospective clients could make informed choices.”
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