8.44. ILEX Professional Standards (IPS) have submitted an application to the LSB to become an
Approved Regulator for awarding probate practice and reserved instrument rights, as well as rule change applications for litigation and immigration. As part of their application IPS have set out the financial protection arrangements they intend to put in place if the application is approved.
8.45. The protections will include professional indemnity insurance provided by open market
insurers who sign up to minimum terms and conditions. A Qualifying Insurers Agreement is currently being drafted. There will be a maximum limit of £2 million per claim and
practitioners will have to buy six years worth of run-off cover.
8.46. IPS also intend to set up a compensation fund, similar to those currently run by the SRA
and the CLC. Applicants to the fund will have to prove hardship before a claim is paid out.
8.47. IPS are also investigating the possibility of setting up an escrow account for use by IPS
regulated entities. This could have a number of advantages, including the fact that all annual auditing would be outsourced to the escrow company, a major benefit for sole practitioners.
8.48. Currently almost all legal executives are employed in solicitors‟ firms, and as such are
covered by the SRA‟s rules. In addition to this we are aware that some legal executives that carry out immigration work have obtained their own professional indemnity insurance on the open market.
Notaries
8.49. Notaries are qualified lawyers, regulated by the Court of Faculties. Within England and
Wales a notary is authorised to carry out reserved legal activities as defined in the Legal Services Act 2007: namely, notarial activities, reserved instrument activities, probate activities and the administration of oaths, subject to the Notarial Rules governing the
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See CLC Fees Framework 2012 (http://www.clc-
profession. However, notaries primarily deal with authentication and certification of
signatures and documents for use abroad and general legal practice. Notaries who are also solicitors carry out most of their domestic work (including litigation) in their capacity as solicitors and are subject to regulation by the SRA.
8.50. The rules which affect Notaries are similar to the rules which affect Solicitors. They must be
fully insured and maintain fidelity cover for the protection of their clients and the public. They must keep client money separately from their own and comply with the Notaries Practising Certificates Rules, the Notaries Accounts Rules 1989 (as amended), and the Notaries Practice Rules 2009 (as amended).
8.51. In accordance with these rules, notaries must provide their regulator, the Faculty Office,
with evidence of insurance against civil liability for professional negligence incurred by them in connection with their practice as a notary. In addition, a notary must provide the Faculty Office with evidence of insurance against financial loss suffered by a third party in
consequence of any dishonest or fraudulent act or any omission by the applicant in connection with their practice as a notary. This information has to be submitted before a practising certificate can be issued or renewed.
8.52. The current minimum limit for professional indemnity insurance is £1,000,000. At the
moment there is no prescribed figure for fidelity insurance cover. However, there are new Notaries Practising Certificate Rules which are due to come into effect in October 2013. These will introduce a minimum limit which will be fixed from time to time by Order of the Master of the Faculties. When first introduced, the minimum limit of fidelity insurance is likely to be not less than £1,000,000.
8.53. Because all notaries have to hold both professional indemnity insurance and fidelity
insurance, notaries are not required to have a compensation fund. Notaries may practice in conjunction with their solicitor‟s practice but must maintain a degree of professional
independence. However, it is possible that notarial practice by a solicitor in conjunction with their solicitor‟s practice may be covered by the SRA compensation fund should a claim arise.
Accountants
8.54. The Institute of Chartered Accountants in England and Wales (ICAEW) has applied to the
Legal Services Board to become an approved regulator and licensing authority for probate activities. As part of their application ICAEW set out the financial protection arrangements they would put in place for those in their regulated community conducting probate activities if the application were to be approved.
8.55. These arrangements would include rules on holding client money and a requirement to hold
professional indemnity insurance. Insurance is provided by „participating insurers‟ who agree to provide terms which meet ICAEW‟s approved minimum wording. For probate practitioners there is a minimum limit of £500,000 per claim. Run-off cover should be maintained for at least two years.
8.56. There is also a probate compensation scheme which is funded by a levy on firms. The
scheme may make grants on a discretionary basis. Only bodies corporate or registered charities with an annual turnover of less than £1 million in the previous accounting year are eligible to apply for a grant. An applicant would have to show that they had suffered loss due to fraud or dishonesty, or failure to account for money. Applications should be made
within 12 months of the time when the loss came (or should reasonably have come) to the knowledge of the applicant.81