Those involved in trusts, probate and estates, whether as role-holders or advisers to executors, administrators, attorneys, Court of Protection deputies, trustees in bankruptcy or supervisors of individual voluntary arrangements, should be concerned about the imminent deadline of 29 August 2019 imposed by the Financial Conduct Authority (FCA) for making Payment Protection Insurance (PPI) claims.
The Society of Trust and Estate Practitioners (STEP) has issued a briefing note and the Official Receiver has announced a review of bankruptcies which may go back to 2000. The FCA says that more than £33bn has already been paid back to people who complained about the sale of PPI, but billions of pounds are as yet unclaimed.
A concern is that firms may be unable to identify or review matters in time, and where they acted for an estate they may have no instructions to pursue any claim. This could in turn lead to claims management companies stirring up claims, an unwelcome development as brokers are reporting a hardening market for renewing professional indemnity insurance (PII).
Firms will need to consider their duty of fair presentation on renewal and may need to consider block notifications to insurers. We have advised many firms on this over the years.
Compounding the problem are the new SRA Standards and Regulations which come into force on 25 November 2019. Rule 7.9 of the Code of Conduct for Solicitors, RELs and RFLs and rule 3.5 of the Code of Conduct for Firms each provide ‘…If requested to do so by the SRA you investigate whether anyone may have a claim against you, provide the SRA with a report on the outcome of your investigation, and notify relevant persons that they may have such a claim, accordingly’. (We commented on other parts of this rule in our May 2019 issue.)
This goes further than Outcome 1.16 of the SRA Code of Conduct 2011, which only mandates notification to current clients. (The original version in force from 6 October 2011 applied also toformer clients, but was amended on 23 December 2011 to limit it to current clients, reflecting the position at common law.)
Exercise of the new power could have a catastrophic effect on a firm’s insurability. Reducing the level or scope of PII, which we understand is still a live issue on the SRA’s agenda, is not the solution! The purpose of insurance is to distribute losses among the many; cutting its level or scope would leave the burden falling on individuals selected largely at random.‹ Back to Publications