The Solicitors Regulation Authority has set out how it plans to shake up the compensation fund levy for the 2026–27 financial year, and the changes are good news for smaller firms in particular.
After running a consultation on its business plan and taking on board what firms had to say, the regulator has decided to rethink how the levy is split between firms and individual solicitors. Rather than the 50/50 arrangement that’s been in place, solicitors will now cover 70% of the cost while firms pick up the remaining 30%. The SRA says this simply reflects how much the profession has changed.
That shift matters most for smaller practices. Firms with 29 solicitors or fewer — which makes up roughly two-thirds of all SRA-regulated firms — should end up paying less than they would have done under the old model. From 2026–27, each firm will be asked to contribute £2,170, with individual solicitors paying £170.
Why the change now? The SRA points to the numbers: since the compensation fund framework was first introduced back in 2010, the number of practising solicitors has grown considerably, while the number of regulated firms has actually gone down. Rebalancing the levy this way, the regulator argues, brings the funding model more in line with what the profession actually looks like today.
It’s not just the levy that’s changing, either. The SRA’s overall budget for 2026–27 is set to jump to £111.5 million — a sizeable increase that’s meant to fund ongoing organisational reforms and regulatory improvements.
The compensation fund itself is also going to need a lot more money than it did last year. Total contributions are expected to hit £46.3 million, largely down to a run of recent interventions involving regulated firms and the ongoing job of protecting clients who lose out financially when a solicitor acts dishonestly or fails to deliver.
Taken together, the SRA says these changes are about keeping the compensation fund sustainable for the long haul, while making sure the burden of paying for it is shared fairly across the profession. profession.
