In the Media

SRA braced for another big intervention

PUBLISHED July 1, 2014

The Solicitors Regulation Authority has warned it may be 'only a matter of time' before another large and costly firm intervention is necessary.

The regulator is set to approve reduced contributions to the Compensation Fund when its board meets on Wednesday.

Individual contributions are set to fall from £56 to £32, while firms will be asked to pay £548 next year, down from £836 in 2013/14.

In board papers released today, the SRA said claims against the Compensation Fund have stayed flat in the last 12 months, while just one claim - for £750 - has been made in respect of negligence claims gainst uninsured firms.

On current trends the number of interventions this year will rise from 47 to 55, 'due to the current economic climate and and financial difficulties firms face'.

The papers add: 'Whilst interventions to the end of March 2014 appear to be more usual in scale and type, based on what has happened historically, it may only be a matter of time before another large intervention takes place, with the associated costs and possible claims which could impact on both the recharge and level/value of claims.'

The SRA has so far managed to avoid any very large-scale interventions, instead preferring that firms find orderly ways of closing down and transferring work, if necessary by means of pre-pack administrations. A spate of mortgage fraud-related claims in the last three years is also abating.

Only 23 such matters remain open, with most expected to be concluded imminently. 

In 2013/14 the amount forecast to be paid from the Compensation Fund is £11.1m. For 2014/15 the predicted recharge is £11.5m, made up of £9.3m in intervention costs plus staff costs. Comparable costs in 2012/13 totalled £6.8m.

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