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Scottish Solicitors' Guarantee Fund to come under review
An independent review is to be carried out of the Scottish Solicitors' Guarantee Fund, which compensates people who suffer financial loss through solicitor dishonesty, the Law Society of Scotland announced today.
To be carried out by the successful bidder in an open tender process, the review will study the purpose of the Guarantee Fund along with the cover and benefits it provides to consumers. It will also consider the funding and management of the scheme and how these fit with the rapidly changing legal marketplace.
Set up under the Solicitors (Scotland) Act, the Guarantee Fund is financed entirely by the owners of solicitor firms through an annual levy. It acts as a fund of last resort for clients who have lost money through the dishonesty of Scottish solicitors and their staff. It is administered by the Society, with applications for payments being considered by a committee made up of experienced solicitors and members of the public. Grants of over £1m were approved from the Fund in 2011-12, the sharp increase from the previous year reflecting the fact that a number of solicitors firms had to have a judicial factor appointed following concerns over their books.
One of the controversial aspects for solicitors of the Legal Services (Scotland) Act 2010, which permitted new forms of ownership of legal practice but which has not not yet been brought into force to that extent, was whether non-solicitor-owned practices should be allowed the same access to the Fund as traditional practices. The legislation does allow such access.
The review is expected to be completed over the next 12 months, with a report and recommendations made to the Society’s Regulatory Committee.
Carole Ford, the non-solicitor convener of the Regulatory Committee, said: “By setting high standards for solicitors and regularly inspecting firms, our first responsibility is to try and prevent problems from arising in the first place. However, we also need a robust scheme that protects innocent clients when things do go wrong, particularly when clients lose money through no fault of their own and as a result of a solicitor’s dishonesty."
She added: “We know the legal market is changing and changing rapidly. That is why now is the right time to have a root and branch review of the Fund and consider whether the arrangements put in place by legislation are still effective and appropriate for today.”