Regulation of Legal Services (Scotland) Act 2025

17 Professional indemnity insurance

(1) Each category 1 and category 2 regulator must have rules concerning indemnity for the legal services providers it regulates against any kind of professional liability.

(2) In particular, the rules may—

(a) require the regulator to establish and maintain a fund or funds for the purpose of such indemnity,

(b) require the regulator to take out and maintain insurance with an authorised insurer,

(c) require legal services providers or any specified type or description of such providers to take out and maintain insurance with an authorised insurer.

(3) Failure to comply with rules made under this section may be treated as professional misconduct or unsatisfactory professional conduct.

(4) Before making or amending rules in pursuance of subsection (1), the regulator (or, where section 8(2) applies, its regulatory committee) must—

(a) consult—

(i) in the case where the rules are being made or amended by a regulatory committee, the governing body of the regulator, and

(ii) the independent advisory panel of the Commission, and

(b) obtain the agreement of the Lord President to the making of the rules or, as the case may be, the amendments.

(5) In this section, an “authorised insurer” is—

(a) a person who has permission under Part 4A of the Financial Services and Markets Act 2000 to effect or carry out contracts of general liability insurance,

(b) a person who has permission under Part 4A of that Act to effect or carry out contracts of insurance relating to accident, sickness, credit, suretyship, miscellaneous financial loss and legal expenses.

(6) The definition of “authorised insurer” must be read with—

(a) section 22 of the Financial Services and Markets Act 2000,

(b) any relevant order under that section, and

(c) schedule 2 of that Act.

(7) In this section, “professional liability” means any civil liability incurred by a legal services provider (or former legal services provider) in connection with the provision of legal services or other services (in addition to legal services) that form part of the professional practice of the solicitors or qualifying individuals within the legal business (within the meaning of section 39(2)) that provides the legal services.