SRA plans 70/30 compensation fund split after consultation on 2026/27 business plan
The Solicitors Regulation Authority (SRA) has confirmed that it will amend its final 2026/27 Business Plan and compensation fund proposals following consideration of feedback from the legal profession, consumer representatives, and other stakeholders.
The regulator said respondents broadly supported its proposed programme of work for the year ahead, which focuses on operational excellence, proactively identifying risk, addressing significant issues affecting the legal sector and improving collaboration. However, consultation responses also highlighted concerns over transparency, demonstrating value for money and the potential impact of higher compensation fund contributions on smaller firms.
In response, the SRA said it will provide greater detail and more regular updates on its progress, alongside further information on the impact of its work and evidence that investment is delivering value. The final business plan and funding requirement will be submitted to the Legal Services Board for approval later this year.
One of the most significant proposed changes concerns how contributions to the SRA Compensation Fund will be apportioned between firms and individual solicitors.
The regulator is proposing to move from the current 50/50 funding model to a 70/30 split, with 70% of the fund’s resources coming from individuals and 30% from firms. The SRA said the change is intended to reduce the financial impact on smaller practices following concerns raised during the consultation and reflects issues previously examined as part of its consumer protection review.
If approved, SRA-regulated firms would contribute £2,170 to the compensation fund for 2026/27, compared with £3,600 under the existing 50/50 model. Individual solicitors would contribute £170, compared with £120 under the current apportionment. The regulator said firms employing 29 solicitors or fewer that pay contributions on behalf of their solicitors would, overall, pay less into the fund than they would under the existing model.
According to the SRA, the proposed 70/30 apportionment would better reflect changes in the profession since 2010, when the current arrangements were introduced. It noted that solicitor numbers have increased while the number of SRA-regulated firms has fallen, meaning the revised split would restore the balance between firm and individual contributions to a position more closely aligned with that in 2010.
For solicitors and firms, the practical significance is that the proposed funding model would alter how compensation fund contributions are calculated if approved by the Legal Services Board. Firms should monitor the outcome of the approval process ahead of the annual practising certificate and authorisation renewal period, when compensation fund contributions are collected each October.