By Ian Fraser

The Herald

November 6th, 2006

The Financial Services Authority (FSA) has denied that it will intervene to block the planned independent complaints handling body for Scottish solicitors from scrutinising claims under the Law Society of Scotland’s controversial master insurance policy.

Last week, Douglas Mill, the society’s chief executive, said the FSA – together with insurer Royal & SunAlliance – would tell the proposed Scottish Legal Complaints Commission to “take a hike” if the proposed new body decided to seek to examine claims and the handling of claims against the master policy.

This is to be part of the commission’s role under the Legal Profession and Legal Aid (Scotland) Bill, which last week completed stage two at Holyrood.

Independent scrutiny of the policy, which covers compensation claims against Scottish solicitors arising from negligence, fraud or dishonesty, is strongly favoured by consumer groups. Critics such as the Scottish Consumer Council have complained that the policy lacks transparency.

A spokesman for the FSA said the Canary Wharf-based watchdog is unlikely to interfere. He said: “I think if anyone were to tell (the Scottish Parliament) to take a hike, it would be more likely to be the Treasury, since it was the Treasury which was responsible for the Financial Services and Markets Act of 2000 which laid down the powers of the FSA.

“They are more likely than the FSA to have view on something that potentially contravenes the Authority’s powers under the Financial Services and Markets Act.”

“Policyholders would have a view if their ability to recover from (the master policy) were to be curtailed. If you have a commercial contract with an insurer and if another body – let’s say the Scottish Legal Complaints Commission – were to try to intervene or meddle in that contract, then I guess that your first course of action would be to go to that body (the SLCC).

In an interview with The Herald last week, Mill said: “They (the SLCC) want to look at claims against the master policy and how these are handled. But they cannot do that. If they do try to do this, I believe the insurers and the Financial Services Authority will tell the Scottish Parliament to take a hike.”

The master policy is a compulsory arrangement for professional indemnity insurance that all Scottish solicitors working in private practice must contribute to annually.

The society arranges the policy through the insurance brokers Marsh. Claims are handled by the current insurers Royal & SunAlliance. The insurance provides cover of up to £1.5 million for any one claim.

This entry was posted on Monday, November 6th, 2006 at 12:47 am and is filed under Article Library, Investigations. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.