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ARP purge forces firms to close

11 October 2010

The Solicitors Regulation Authority has recovered more than £750,000 in unpaid insurance premiums since launching a crackdown on firms in the assigned risks pool earlier this summer, initial figures show.

The regulator’s plan to purge the ARP (see, 19 July 2010) will also lead to the closure of 47 firms.

Chief operating officer of the SRA Mike Jeacock said the strategy had proved “a success” and that the regulator was determined to ensure that the ARP operated effectively and would “maintain this rigorous approach to its management in future”.

Firms falling into the ARP have a four-week grace period during which they are expected to seek insurance on the open market.

However, there were still 213 firms in the ARP at the time the SRA’s board approved the new, tougher strategy, nine months after they should have left.

The SRA’s “tough enforcement strategy” of managing firms out of the ARP involved contacting all those approaching the end of their two-year term in the pool by the end of July.

The objective, chief executive Antony Townsend said at the time, was 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”.

Townsend also pledged that firms entering the ARP this month would be treated in the same way.

According to the SRA, there have been 418 applications to date (7 October 2010) compared to 428 at the same time last year.

“Of these, 22 have already found cover on the open market since 1 October, so will not be in the ARP. Others are likely to do so over the coming weeks,” a spokesman for the SRA said.

He added that over 90 firms which made applications for this indemnity year were in the ARP last year (2009/10).

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