The delay means SIF will continue to provide post six-year run-off cover until September 2022 for claims against firms which have closed without a successor practice.
The extension is good news for retired solicitors, some of whom warned the closure of SIF would leave them exposed to the risk of historical claims.
The SRA will now consult on the future of post six-year run-off cover. It warned this week the extension is subject to an affordability test because the fund is deemed beyond the time when a conventional insurance company would have taken steps to bring it to a close.
Anna Bradley, chair of the SRA Board, said: ‘We will need to give careful consideration to finding the right regulatory balance between consumer protection and issues of proportionality, affordability and the wider public interest.’
However, Bradley said she recognised the concerns of the legal profession and the fact the insurance market has hardened, making it more difficult for alternative arrangements to be found.
Post six-year run-off cover is additional to the mandatory six-year run-off cover which the SRA requires firms to have. SIF closed in 2000 when the profession moved to an open market insurance model. It was originally due to close in September 2017, but there have been several extensions since then.
Law Society president I Stephanie Boyce said: ‘We have been raising our concerns with the SRA, the regulator for this issue, for more than three years.
‘We are pleased they are now taking steps to find an effective solution and undertake the detailed analysis required to assess the future of post six-year cover.
‘But it is not enough simply to delay closure again in the hope that next year the commercial indemnity insurance market will change and fill the gap in consumer protection that SIF closure will create. It needs to show imagination in looking at long-term solutions that provide proper levels of consumer protection and do not expose solicitors to ruinous claims or consumers to potentially lengthy and complex litigation.’
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