SRA seeks solution to increased interventions’ costs
The Solicitors Regulation Authority (SRA) is looking at ways in which it can deal with the higher-than-expected costs of interventions.
Due to the current uncertain economic climate, a substantial number of firms are facing financial problems. Should those firms find themselves in a position where they can no longer discharge their obligations to clients, then the SRA may have no alternative but to intervene.
Although SRA interventions were down in 2012, 2013 has seen a rise with 15 interventions taking place in the first four months of the year – two of which are estimated to cost £1.8 million because of the size of the firms involved. There can be no certainty over future possible intervention costs, but from within a range of scenarios, the SRA’s best estimate is that the cost in 2013 may be around £7 million.
Having considered the options available to meet the increased cost, the Board of the SRA has taken the view that the only viable option is to use the powers available to it under the Solicitors Act 1974 and use the Compensation Fund.
As a consequence, a four-week consultation is now taking place so that key stakeholders can express their views. The exercise will close on 31 May.
Richard Collins, SRA Executive Director for Policy, said:
“In light of the increased budget pressure caused by this unexpected rise in interventions, the Board has decided that the best course of action is for the Compensation Fund to be used to pay the cost of interventions. We are therefore holding a short consultation exercise, which allows us to explain to the profession and other stakeholders what the situation is and why we believe this is the best way to deal with it.
“We have also asked that anyone who does not support this approach to identify other means of funding intervention costs. It is important to note that, whichever solution is decided upon, it is the profession that ultimately carries the cost of interventions – to the extent that it is not possible to recover the costs from the managers of intervened practices.”
If you have any concerns regarding the issues raised in this article, you can find more information in our SRA service page. Alternatively, you can contact us directly to discuss any specific concerns you may have.