Time to protect Access to Justice

Well, we finally have it, though you may not know about it... the Solicitors Regulation Authority (SRA) very quietly, on a Friday afternoon at the end of March, introduced their (very) long awaited consultation on seeking to cap the fees that SRA regulated firms can charge consumers for financial services claims that are not litigated.

This paper has arisen as a result of the Financial Guidance & Claims Act 2018 (FGCA) and the burden it placed on the SRA and others to seek to investigate the pricing structures charged to consumers.

The main proposals in this consultation are suggestions for draft rules to 'protect consumers from excessive charges' when they are represented by solicitors in claims relating to financial products and services.

These rules will 'seek to introduce important new regulatory safeguards into the Standards and Regulations of the Solicitors Regulation Authority (SRA), and will deliver the SRA's statutory duty under the FGCA 2018 to make rules ensuring an 'appropriate degree of protection for consumers against excessive charges'.'

The consultation seeks feedback on these draft rules, as well as on the SRA's assessment of financial service claims management activity provided by law firms and solicitors, and whether the SRA is using the right objectives as the basis for developing its rules.

We in the Consumer Redress Association have held a series of meetings with each and every one of the teams at the Solicitors Regulation Authority working on these proposals, and I was at the FCA's meeting in January 2019 when the SRA announced they were going to introduce rules that were identical to those of the FCA's for CMCs, and along the same timescales.

Of course, we challenged the FCA's rules and sought to judicially review the introduction of their proposals - which was unsuccessful, and CMCs have been bound by the fee cap since March 2022 - however, SRA firms have not. The parallel timetable had been quietly shelved due to our legal challenge to the FCA and our continued engagement with the SRA to demonstrate where the proposals were potentially based on the wrong evidence and assumptions, and how they could lead to an alarming reduction in access to justice for many consumers.

The SRA propose to introduce the same banding system and monetary limits for claims, and let me emphasise that the CRA does not disagree that consumers should be protected from excessive fees, and we are not anti-fee capping.

However we do not agree with the FCA's proposals for complex claims, and we are glad that the SRA has listened to our representations and has asked for more evidence as they seek to introduce their rules.

Where the SRA have differed is around the proposals for exemptions from the parameters of the banding system of charging.

But also - and crucially,

The paper concedes that the SRA has received feedback and evidence indicating that there is a proportion of cases where the banding framework and maximum percentages may not be appropriate. These cases are typically more complex or novel financial service claims that incur higher costs for the law firm, meaning that if they were subject to the banding framework, this work may become unviable.

It is here that we as a profession now need to fully engage with the SRA and provide them with evidence as to where and how this is the case.

I met with the SRA again last week and it is clear that their appetite for receiving hard evidence to ensure that the issues around complex claims and the potential for these to be outside the scope of the banding system is clear.

That is why we need to work collectively and to co-ordinate our responses, both individually and collectively as a trade body.

We are running a session with the SRA for our members on the 15th May, and I want to invite you to get in touch with me if you think you might like to work with us on these issues and potentially join us and attend this meeting. The SRA are very keen to engage and to listen.

So please do get in touch with me here or email me at simon@crauk.co.uk if you want to know more, or about joining the CRA as we seek to ensure consumers still have the widest possible routes to access to justice.

This WILL affect you if you undertake financial services claims if you don't take note and take action now, so do get in touch today.

Simon Evans

Chief Executive

Consumer Redress Association