52.This section requires a category 1 regulator to establish and maintain a fund for the purpose of making grants to compensate persons who suffer financial loss by reason of dishonesty by a legal services provider regulated by the regulator (or a provider it regulated at the time the dishonesty occurred). If the regulator has non-regulatory functions, the fund must be under the management and control of its regulatory committee including in respect of decisions about making payments from the fund. The regulator or the committee (as the case may be) must have rules which, among other things—
	require contributions from the legal services providers that are being regulated,
	specify the criteria for making a grant from the fund, and
	state the minimum amount of money to be kept in the fund.
53.The Scottish Ministers (only at the request of the Lord President, the category 1 regulator, or the independent advisory panel of the Commission) may by regulations make further provision in connection with funds established under this section and the rules that the regulator or the committee must have for them. The regulations are subject to the affirmative procedure. Before making a request, the requestor must consult each category 1 regulator or, if applicable, its regulatory committee and the independent advisory panel of the Commission (but such a body need not be consulted if the body is the requester). The requester must also consult such other person or body as the requester considers appropriate. The Lord President must also agree to the making of the request (unless the requester is the Lord President). Subsections (12) and (13) set out the documents required when seeking the Lord President’s agreement and when making a request to the Scottish Ministers. As soon as practicable after the request is made, the requester must publish those documents.
Background Part 1 – Regulatory Framework Requirements of category 1 regulators Section 13 – Compensation funds