Solicitors firms to be kicked out of the ARP

The Solicitors Regulation Authority board has approved a strategy for the enhanced control of the Assigned Risks Pool.

The ARP - which currently includes around 213 firms - provides indemnity for solicitors' firms who have failed to obtain insurance in the market.

The board has approved that::

  • By the end of July all firms in the ARP who are reaching the end of their two-year term will be contacted to ensure that there are robust plans in place for them to leave the ARP by October—either through obtaining market insurance or through orderly wind-down.
  • Also by the end of this month, all firms in the ARP who have not paid their ARP premiums will be contacted and told that they must pay promptly. Firms who fail to do so will face regulatory sanctions and/or will face court action, and/or will be declared ineligible for any further term in the ARP and closed down.
  • In August and September, regulatory action will be pursued in relation to these matters, so that by October as many firms as possible—particularly high-risk firms and those failing to pay their premiums—will have been managed out of the ARP.
  • In October, any firms whose position has not already been resolved will face the likelihood of intervention to close them down.
  • Firms newly entering the ARP in October will be treated in the same way.

Chief executive Antony Townsend said: "The tough enforcement strategy which the SRA Board has approved is designed to ensure that firms stay in the Assigned Risks Pool for as short a period as possible; that firms which pose a high risk are rectified or closed down; and that firms who fail to pay their premiums face credible deterrents, including prompt closure.

"Compulsory professional indemnity insurance for solicitors' firms is an essential element of the current arrangements to protect consumers of legal services.

"While it is right that firms experiencing difficulty in obtaining professional indemnity insurance should be given some assistance to do so, it is wrong that firms which are financially unstable or pose a significant risk should be propped up: that poses a danger to consumers, and a burden upon the profession who pay for the Assigned Risks Pool. Neither is acceptable."

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