SRA launches consultation on new run-off cover arrangements
The Solicitors Regulation Authority (SRA) is carrying out a consultation on new arrangements for post six-year run-off cover (PSYROC) having confirmed the closure of the Solicitors Indemnity Fund to new claims from September 2022. The consultation covers England and Wales and the deadline for responses is 15 February 2022.
Run-off cover provides insurance for claims made against a solicitors’ firm that has closed without a successor. Its primary purpose is to ensure that the financial interests of the firm’s clients are protected, which is a key regulatory objective of the SRA. Run-off cover also provides retiring solicitors with peace of mind. The SRA’s minimum terms and conditions require firms that close without a successor to hold six years’ worth of run-off cover. PSYROC steps in once that cover expires.
The Solicitors Indemnity Fund is made up of historical funds from the profession. The decision to stop accepting new claims was made following actuarial advice, which concluded that continuing to provide PSYROC would not be prudent without any additional funding.
The SRA consultation is asking respondents for their views on various alternatives. These include making PSYROC voluntary or amending the minimum terms and conditions to require firms to hold equivalent cover through the open market.
According to guidance published by the Law Society in December 2021, it is important that the profession understands the changes, in order to protect themselves and their clients. Solicitors who worked for firms that closed on or between 1 September 2000 and 30 September 2016 are most impacted. Contact us for assistance.