• March 28, 2024
 ILM responds to SRA consultation

ILM responds to SRA consultation

The Institute of Legacy Management (ILM) has issued its response to the proposals made in the recent consultation from the Solicitor’s Regulation Authority (SRA).

A membership body for legacy professionals, the ILM has voiced its concern over the implications of some of the plans, particularly over the reduced level of cover and the resulting impact on charities.

It also highlights its fears over the narrowing of eligibility in regard to protection, stating that as ‘charities work with some of the most vulnerable in society, any lack of protection will, by default, fall on them.’

Fully detailed last week, the proposals from the regulator include the creation of separate Codes of Conduct for firms and solicitors, improving price and service transparency, enabling solicitors to work on a freelance basis as well as reductions to the level of mandatory professional indemnity insurance. The latter proposal received criticism from the Law Society earlier this month.

Given its position as a representative body for legacy professionals, the ILM highlights it’s unique perspective in responding to the SRA’s consultation and the issues which the proposals are aiming to address.

Having engaged with the suggested changes on an organisational level, the ILM has set out its responses to various aspects of the consultation, with a view to best reflect the opinions of its members.

These are set out below:

To what extent do you think the proposed changes to our PII requirements provide an appropriate minimum level of cover for a regulated law firm?

Strongly disagreeing with this statement, the ILM highlights its concern over compensating the additional loss. It states that in some instances, charities benefit from very large estates where the potential for loss to the estate, and in turn, the beneficiaries, can exceed £500,000.

To what extent do you agree that our minimum PII requirements do not need to include cover for financial institutions and other large business clients?

The organisation also sets out its concern in regard to this statement and how that many charities may come under the umbrella of business; pointing out the non-profit nature of many charities, the ILM states that the purpose is of a different nature, with funds raised contributing to ‘often lifesaving work’. As such, it strongly disagrees with the statement.

Do you think our definition for excluding large financial institutions corporations and business client is appropriate?

Answering ‘NO’ to this question, the ILM reiterates its earlier point regarding the differences in objectives between regular businesses and charities. It states that ‘To exclude such non-profit organisations from protection unjustly exposes not only the charity itself, but its employees and volunteers and ultimately its service users or charitable objectives.’

To what extent do you agree that the proposed changes to the Compensation Fund would clarify its purpose as a targeted hardship fund protecting the vulnerable that need and deserve it those in most?

The ILM expresses its concern on two levels in regard to this statement; both in terms of narrowing eligibility for firms and once again referring to the additional loss.

It states that: ‘The removal of large charities from eligibility for the Compensation Fund misaligns them with commercial enterprises generating income for their shareholders, instead of non-profit making organisations whose income is immediately spent on furthering its charitable objectives, often helping those in hardship themselves.’

Do you think we have set out the right approach for assessing when a maximum payment has been reached?

Once again expressing its disagreement with the proposal from the SRA, the ILM draws attention to an apparent inequity of approach towards clients who suffer the same loss, which is based on the number of retainers.

It sets out that this proposal could ‘impact charities who might jointly instruct a solicitor to act on their behalf in an estate, or indeed lay executors within an estate which is defrauded.’ It states that in either case, the intention of the donor – to benefit others – is prevented by the conduct of solicitors ‘and again by the Compensation Fund.’

The full response can be accessed here.

Georgia Owen

Georgia is the Senior Content Executive and will be your primary contact when submitting your latest news. While studying for an LLB at the University of Liverpool, Georgia gained experience working within retail, as well as social media management. She later went on to work for a local newspaper, before starting at Today’s Wills and Probate.