Financial statements we published today show that last year (November 2015 to October 2016), it granted around £10.3m from the Compensation Fund.
The amount granted this year is lower than the £17.9m in 2015 (November 2014 to October 2015), which reflects the number and types of claims. The fund is discretionary, administered by us, and pays grants to members of the public, charities, and small businesses which have suffered financial hardship when, for instance, solicitors have stolen or misappropriated client money.
The majority of payments from the fund are linked to interventions – when we takes possession of a law firm’s files and client monies to protect clients’ interests. In the last year, the top two reasons for compensating consumers were replacing misappropriated inheritance (£4m), and replacing stolen funds that were intended for house deposits (£1m).
A levy for the fund is collected annually from the profession and law firms as part of the annual practising fee collection. Contributions to the fund can vary from year to year, reflecting changing risks in the legal services sector and what that may mean for the expected number and size of claims.
Paul Philip, SRA Chief Executive, said: “The Compensation Fund is there to meet real hardship, providing valuable protection for the public when a solicitor is dishonest or does not properly account for clients’ money and there is no other means of redress. We monitor the market closely so that we can be confident that the fund can meet the demands made upon it.”
Further information on the Compensation Fund can be found here:
The Compensation Fund statement can be found here: