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Practice M&A PII · Successor practice

Successor practice PII — the regulatory framework, by profession

Reviewed by Matthew Bartlett, Director, Apex Insurance Brokers Limited · Published 14 July 2026

‘Successor practice’ is a specific regulatory term with material PII consequences. Whether a new or continuing firm is a successor to a ceased firm affects who carries run-off cover, who inherits prior-act liability, and what PII the new firm must hold. This page maps the framework across the main professions.

Why the definition matters

Successor status can attach without a formal transaction — regulators look at substance, not just structure. A firm that carries on the same or substantially similar business as a ceased firm can be a successor even where the SPA describes only an asset purchase.

Successor practices typically inherit regulatory responsibility for the ceased firm's prior acts. That in turn drives PII structuring.

SRA (solicitors) successor practice

The SRA Handbook and MTC define successor practice for solicitors. A firm can be a successor by: (a) formal succession under the SPA; (b) carrying on the same or substantially similar business; (c) taking on the ceased firm's client files or key personnel.

  1. If deemed a successor, the successor firm assumes the ceased firm's SRA MTC obligations for prior acts.
  2. The ceased firm's six-year run-off obligation may transfer to the successor, or the ceded entity may still need to hold it — depends on structure.
  3. Successor firms must confirm their PII covers the acquired book's prior acts.

ICAEW (accountants) successor practice

ICAEW Bye-law 61 applies to authorised firms. Successor treatment is less formalised than SRA but the principle is the same: a firm carrying on ceased-firm business typically inherits its regulatory obligations.

  1. ICAEW two-year run-off obligation attaches to the ceased firm; successor treatment may transfer the obligation.
  2. DPB-regulated activity carries FCA-equivalent standards under the DPB rulebook; successor treatment mirrors FCA principles.
  3. Practical placement question — whose PII covers what.

ARB (architects) successor practice

ARB Standard 8 applies to individual architects, not just firms. A successor architectural practice inherits the ARB adequacy standard for cover.

  1. BSA 2022 s.135 extended limitation for higher-risk-building negligence to 30 years pre-June 2022 and 15 years going forward — successor practices for such work take on a very long tail.
  2. Individual architects moving between practices retain their personal cover under the current employing practice.
  3. Retiring architects may need continuing personal PII beyond firm run-off if BSA-touching work is at issue.

RICS (surveyors) successor practice

RICS Rules of Conduct Rule 9 requires PII adequate to the practice. Successor treatment applies where a firm takes on ceased-firm business.

  1. Turnover-band cover scale under RICS guidance applies to the ongoing practice, not the ceased firm.
  2. Where valuation-related work is inherited, the specific claims exposure of that work must be documented in the transfer.
  3. Successor firms often need higher cover limits than the ceased firm to reflect combined turnover.

FCA-authorised firms — successor treatment

FCA-authorised firms have permissions attached to legal entities. Succession requires formal permissions transfer or fresh authorisation.

  1. Successor firms need FCA authorisation for the activities they take on.
  2. MIPRU 3 (insurance brokers) PII adequacy applies to the successor from authorisation.
  3. SUP 15 notification of material transactions applies.
  4. Consumer Duty (PRIN 2A) obligations transfer to the successor for continuing client relationships.

Getting the PII structure right

  1. Identify whether the transaction creates a successor practice — take proper regulatory and legal advice.
  2. Confirm the ceased firm holds and will maintain run-off adequate to the professional tail.
  3. Confirm the successor's PII covers acquired-book prior acts to the extent required.
  4. Fair-presentation disclosure at the successor's next renewal.
  5. Handle regulator notifications (SUP 15, SRA cessation, ICAEW notification, ARB, RICS).

Frequently asked

What makes a firm a 'successor practice' for PII purposes?
The regulator's rules define it. In broad terms: a firm that carries on the same or substantially similar business as a ceased firm, either through formal succession, taking over client files, or continuing under a new name. Substance matters more than form.
Do we inherit the ceased firm's PII liabilities as a successor?
Typically the successor takes on regulatory responsibility for prior acts. Whether that translates into PII coverage requires structuring — either the ceased firm maintains run-off, or the successor's PII extends to prior acts, or both.
Can we avoid successor-practice status by restructuring the transaction?
Sometimes, but regulators look at substance. Carrying on the same clients, the same personnel, or the same practice areas typically triggers successor status regardless of legal form.
Does successor status differ between SRA, ICAEW, ARB and RICS?
Yes. Each regulator has its own definition and consequences. The SRA framework is the most formalised; ICAEW works through Bye-law 61 and the DPB rulebook; ARB and RICS apply adequacy standards to the successor's ongoing business.
If our firm merges with another, are we both a successor to each other?
Practically yes. The combined firm is typically a successor to both merging firms. PII must respond to both firms' prior acts.
What if the ceased firm cannot fund run-off?
The successor may be regulatorily required to carry the run-off obligation, or partners of the ceased firm face personal exposure. Structure this into the transaction — do not accept 'no run-off' as a default.
Does BSA 2022 change the successor conversation for architects?
Materially. Successor practices to firms that worked on higher-risk buildings inherit up to 30-year tail exposure. PII sizing and structure must reflect that.
What FCA notifications are required in a successor-practice transaction?
SUP 15 notification of material matters; MIPRU 3 confirmation of adequate PII; Consumer Duty implementation for acquired client relationships; possibly change-in-control approval where a controlled function is affected. Get FCA-focused legal advice.

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