The Solicitors Regulation Authority should prosecute every solicitor who lies on their professional indemnity insurance (PII) application form, the chief executive of the Law Society said yesterday.

Speaking at an Association of British Insurers (ABI) seminar on solicitors’ PII, Desmond Hudson said that the profession 'needs to guarantee quality and get its own house in order', and attacked the SRA over its 'mismanagement' of the assigned risks pool (ARP) and its plans to reform the PII market.

Hudson said he personally thinks that 'the day of the ARP is over'. In its consultation on reform of financial protection arrangements, the SRA has recommended shortening the time that firms can spend in the ARP, rather than abolish it altogether.

Hudson and representatives from the SRA and ABI agreed with the suggestion that law firms should be listed on a public website alongside details of their insurance cover.

Hudson said: 'The SRA mismanaged the ARP to the detriment of the profession and insurers. There continue to be very serious concerns from lenders, PII providers and the profession about how the ARP will be managed and funded. The changes mooted by the SRA would be massively detrimental to the profession.

'We fundamentally oppose removing [financial institutions] cover from the minimum terms and conditions. Removing [financial institutions] cover from the minimum terms will damage private house buyers. Transaction costs will go up. It is a direct threat to solicitors' firms up and down the country. I have not yet seen a persuasive argument from the SRA that the removal of that is in anybody's interest.

'The profession needs to guarantee quality and get its own house in order first. The conveyancing quality scheme is part of that. Secondly, we need a good scheme for insurers, but that is not served by a stifled market.'

Mark Cassady, professional indemnity portfolio manager at insurer QBE, said: 'The ARP isn't a hospital: it's a hospice. Firms go in there to die. And it's costing the profession a great deal of money.'

Andrew Baddeley-Chappell, head of mortgage strategy and policy at Nationwide Building Society, called on the SRA to release details of all firms in the ARP. 'If someone would tell us who the ARP firms are, we would stop dealing with them,’ he said.

Richard Collins, head of standards at the SRA, said that the regulator could not release details of firms in the ARP for data protection reasons, but added: 'Personally, I think that they should be a matter of public record. All firms should be listed on a website with details of their insurance.’ Hudson and Matthew Young, policy adviser at the ABI, agreed.

Nick Starling, director general of insurance and health at the ABI, said that Solvency II, a review of the capital requirements for the European insurance industry, will have a huge impact on insurers' ability to support the ARP once a new regime is set in place in 2013. 'The harder our liabilities are to predict, the more insurers will have to set aside [as capital reserves],’ he said, adding that new reporting rules under Solvency II could also 'reduce insurers' appetites' for funding the ARP. 'The need to change the way the pool is funded is crucial,' he said.

The SRA's Collins said: 'One of my concerns is that the current system of comprehensive cover across all firms can be a bit of a cop-out for lenders: they don't look as closely as they should at the firms they work with. I think [the SRA's proposed changes] will make lenders look more carefully, and they will absorb some of the risk as a result.'

The ABI released research yesterday suggested that four insurers are unsure whether or not they want to provide solicitors' PII cover this year.