SRA Handbook

Eligibility of firms in default

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Rule 14: Eligibility of firms in default

14.1

At any time during the period of default a firm in default is entitled to be admitted to the ARP and to be issued with an ARP policy in accordance with Rule 14.2, subject to the provisions of this Rule 14.

14.2

A firm in default is entitled to be admitted to the ARP if:

(a)

it was an eligible firm at the start of the period of default;

(b)

had it been admitted to the ARP at the start of the period of default, its admission at that time would not have rendered it ineligible to be admitted to the ARP for any part of any subsequent indemnity period in which it was in fact admitted to the ARP;

(c)

it has applied to join the ARP in accordance with Rule 10;

(d)

the firm discharges in full the ARP default premium calculated for the whole of the indemnity period or indemnity periods for which cover is sought within 30 days of such premium being notified to it by the ARP manager or such longer period as the Council may allow;

(e)

the firm will be subject to and comply with Rules 10.3 (other than Rule 10.3(a)) and 11.2.

14.3

An ARP policy issued under this Rule may afford cover retrospectively from the start of the period of default until the earlier of:

(a)

the end of the then current indemnity period; or

(b)

the date on which the firm in default would have ceased to be an eligible firm, ignoring for these purposes any failure to pay the ARP premium or the ARP default premium; or

(c)

the date on which, had the firm in default been admitted to the ARP at the start of the period of default, its being covered by the ARP from that time would have first caused it to have been ineligible to be admitted to the ARP for any part of any subsequent indemnity period in which it was in fact admitted to the ARP.

14.4

A run-off firm shall be entitled at any time following the date on which it first becomes a run-off firm to be admitted to the ARP and to be issued with an ARP run-off policy, subject to the following conditions:

(a)

the run-off firm has made an application to join the ARP in manner provided by Rule 10.5 stating on the proposal form that it is a run-off firm and giving the date from which cover under an ARP run-off policy is sought;

(b)

the ARP run-off premium is discharged in full within thirty days of such premium being notified by the ARP manager to the firm or such longer period as the Council may allow; and

(c)

the firm, and any person who is a principal of that firm, will be subject to and comply with Rule 10.3(c).

14.5

An ARP run-off policy shall provide run-off cover to a run-off firm retrospectively from the date on which it became a run-off firm until the end of the day immediately prior to the sixth anniversary of:

(a)

the start of the indemnity period in which it became a run-off firm; or

(b)

if applicable, the start of the last indemnity period, prior to it becoming a run-off firm, in which it both ceased to be an eligible firm and was a firm in default and continued as such until the date on which it became a run-off firm,

whichever is the earlier.

14.6

Rule 12.7 shall apply so as to enable the Council to extend the period in Rule 14.3(b) for which a firm in default may be issued with an ARP policy.

14.7

Any firm that has been admitted to the ARP under Rule 14.1 shall for the purposes of computing its continuing eligibility to remain in the ARP be deemed to have been admitted to the ARP at start of the period of default and to have remained continuously in the ARP until the end of the indemnity period current at the date of its application.