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Client financial protection arrangements

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The SRA are seeking your views on our proposals for amendments to our client financial protection arrangements.

The key changes proposed for October 2011 are

  • to remove the restriction of the single renewal date,
  • to permit the exclusion of cover for claims arising from work done for financial institutions from the minimum terms and conditions,
  • to limit the amount of time a firm can stay in the assigned risks pool (ARP) to six months, and
  • to clarify the requirements on insurers to provide information to the SRA regarding firms that fail to pay their premiums or may have misrepresented information.
  • Options for discussion for October 2012 or beyond include

  • permitting additional exclusions of corporate clients from the minimum terms and conditions, over and above the proposed exclusion of financial institutions;
  • changing the role of the ARP, possibly by ending its role as a provider of policies of qualifying insurance completely, thereby limiting its role to the provider of client protection to firms that do not have professional indemnity insurance;
  • altering the way in which the ARP shortfall is funded, by considering either a direct levy on the profession or a levy as a percentage of insurance premiums;
  • considering whether the functions of the ARP that remain and those of the Compensation Fund could be combined into the Compensation Fund;
  • considering whether insurers should be able to cancel policies for non-payment of premiums, fraud or misrepresentation in information provided by the firm to the insurer.
  • The deadline for responses to this consultation is 28 February 2011.

    To take part or to find out more, visit www.sra.org.uk/consultations

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    Written by Andrew Hodges

    December 14, 2010 at 4:24 pm

    Posted in Comment, LinkedIn

    Tagged with , ,

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