Remains ‘under review’
The Solicitors Regulation Authority (SRA) has said it won’t be making solicitors cough-up additional cash to help cover compensation claims following the collapse of Axiom Ince — at least not right now, anyway.
The regulator confirmed yesterday that will not be asking solicitors to make one-off contribution “at this point, but will keep this under review in the light of any further interventions or other unforeseen events”.
In October the SRA revealed it may require solicitors to make an additional payment as means of addressing the millions of pounds in potential claims from Axiom Ince clients. The firm was shut down last month, not longer after it emerged £64 million had gone missing from its client account.
The regulator controls a special compensation fund that aims to support people who are owed money by a regulated law firm. Solicitors contribute to the fund through a levy added to the practising certificate fee.
There has been much speculation in recent weeks over how the fund, which reportedly has around £18 million sitting in it, could adequately cover the vast number of claims which, according to the SRA, currently total £33 million.
But the regulator says it has come up with short-term solution. It confirmed yesterday that it will not be imposing an overall cap on claims, but rather it would prioritise certain ones — such as for domestic conveyancing — “in order to maintain the financial solvency of the fund”.
Although the rules of the compensation fund enable the SRA to impose a discretionary £5 million overall cap on claims, the regulator said this wasn’t appropriate in this case.
“The scale of consumer loss, were the cap to be applied, would be too large, and would lead to an unacceptable loss in public confidence in solicitors,” it said. “However, by adopting a careful prioritisation approach to the settling of claims, the aim is to manage the short-term solvency of the fund and avoid extreme consumer detriment.”