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The SRA Handbook is no longer in effect. It was replaced by the SRA Standards and Regulations on 25 November 2019.

SRA Handbook

Time in the ARP

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Version 2 of the Handbook was published on 23/12/2011. For more information, please click 'History' Above

Rule 12: Time in the ARP

12.1

A firm may leave the ARP at any time after it has satisfied the ARP manager that the firm has obtained qualifying insurance outside the ARP at least until the expiry of the relevant indemnity period.

Commentary:

Refer to Appendix 2 to determine whether any return premium will be payable on leaving the ARP.

12.2

Subject to Rule 12.6, a firm may only remain in the ARP so long as it is an eligible firm, or if it becomes a run-off firm.

Commentary:

A firm cannot remain insured through the ARP for more than 6 months in any four consecutive indemnity periods (unless it satisfies one of the exceptions to this requirement in the definition of "eligible firm"), and should therefore seek insurance in the open market with a qualifying insurer as soon as practicable. A firm which is no longer an eligible firm (because, for example, it has already been insured through the ARP for 24 months in the last four indemnity periods) must either obtain qualifying insurance on the open market or cease carrying on practice.

12.3

Subject to Rule 12.6(b), a firm in policy default at the end of an indemnity period shall be deemed to be a firm in default for the purposes of Part 4 of these Rules and shall not be an eligible firm. This Rule shall not apply in any case where the Council is satisfied that there exists a genuine dispute between the firm and a qualifying insurer or the ARP manager which makes it unreasonable for the firm to be deemed to be a firm in default pending the resolution of that dispute.

Commentary:

A firm in policy default must remedy that default before the start of an indemnity period if it wishes to obtain insurance through the ARP at any time during that indemnity period. Alternatively, it must either obtain qualifying insurance in the open market, or cease carrying on practice. If a firm believes that there is a genuine dispute which justifies that firm not being deemed to be a firm in default, it should apply to the SRA as soon as possible before the start of the next indemnity period. Contact details appear at the end of the introductory commentary.

12.4

A firm that is no longer an eligible firm must either have qualifying insurance outside the ARP or forthwith cease carrying on practice.

12.5

The Council may in its absolute discretion treat a successor firm or successor firms (or any of them) and the firm from which such successor firm or successor firms were derived as being a single firm for the purposes of determining whether the successor firm or successor firms or any of them are or remain an eligible firm.

Commentary:

The purpose of this Rule is to ensure that the time limit on participation in the ARP cannot be avoided by a merger or reconstitution of that firm. A firm which was not previously eligible to join the ARP will not necessarily become an eligible firm by virtue of changes in the composition of a firm. firms which are unsure about their eligibility following any such change should consult the SRA. Contact details appear at the end of the introductory commentary.

12.6

The Council shall have power in any particular case or cases:

(a)

to allow a firm to remain in or to re-enter the ARP after any date when the firm would otherwise cease to be an eligible firm; and

(b)

to permit a firm to be admitted into or remain in or to re-enter the ARP notwithstanding that the firm is in policy default on such terms and conditions as the Council may prescribe including the taking of steps by the firm by a specified date or dates to remedy the policy default;

and when such power is exercised the firm shall continue to be an eligible firm for so long as the Council may from time to time permit and provided that it complies with any such terms and conditions.

Commentary:

It is envisaged that these powers would be exercised only in exceptional circumstances. Any application seeking the exercise of this power should be made to the SRA at least three months before the firm in question would otherwise cease to be an eligible firm.

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