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Solicitors Regulation Authority Consultation

Moving toward a fairer fee policy – detailed proposals

The SRA has published detailed proposals for a new structure for paying for the regulation of solicitors.

A new consultation paper sets out their preferred model for sharing the costs of regulation, following responses to an initial paper published by the SRA and the Law Society in June, and gives examples of how the new structure might work for different sizes of firms.

The SRA and the Law Society believe that the current system, in which costs are allocated through the practising certificate fee, leads to anomalies and unfairness — with firms of similar size, turnover, and types of practice paying widely varying fees.

Changes brought about by the Legal Services Act 2007, including firm-based regulation, provide the opportunity to create a fairer system, involving a combination of individual and firm-based fees.

Feedback from the first consultation exercise provided broad agreement on the principles and objectives for a new fee structure, and on the proposal to use banded turnover as the basis for calculating the firm-based fee.

Key proposals in the current consultation are as follows:

Firm-based fee should be based on banded turnover. This takes into account how much business a firm does, and is linked to ability to pay.

Cost should be allocated so that around 40 per cent of the total funding of regulation is raised through the individual fees, and 60 per cent through the firm fees. (The SRA proposes that, in the longer term, this should move to 20–40 per cent for individuals, and 60–80 per cent for firms.)

The types of exceptions and discounts that are currently allowed for individuals should be simplified and minimised, taking into account the fact that the fee for individuals will reduce significantly.

The paper also seeks views on options for the allocation of Compensation Fund costs. The deadline for submission of responses is 22 January 2010.

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Article Reference: alcd. org.uk/?q=node/63

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