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I know it states that arbiters are not faction leaders but does that mean they CANT be a leader or that they arnt automatically a faction leader ?

If they are a faction leader, they outrank arbiters and can't serve as one anymore. they stop being arbiters and become faction leaders.

it's a rank within the organization. you get promoted up, you stop being that rank.

It's like how if your a senator and you get voted president, you can't serve as senator at the same time.

So would they loose the bonuses ? Even if they started a smaller sub-group within a larger parent group ?

The Bonus's are all a combination of one-time bonus's due to skills learned, and these would not be lost. You don't suddenly forget faction secrets, stop paying as much attention or lose your previous intimidating reputation or lose loyalty because you got promoted.

That being said, while they wouldn't lose any bonus's already incrued, they would stop all advancement as an arbiter. Simply because the majority of an aribters job is being deeply involved in the day to day politics and running of a faction, and all the bonus's are directly reflective of this fact. once you become the actual leader, you become the "big picture" guy, isolated behind walls of reports and security mesures.

In short, you won't forget what you learned, but like any leader of a powerful organization, you'll be so busy with big picture stuff and so isolated by bodyguards that you'll lose touch with the day to day operations, and the razors edge that life as an arbiter requires.