It has been revealed that the Financial Conduct Authority (FCA) has intervened in nearly 500 professional indemnity insurance (PII) based issues relating to financial advice firms since the start of 2019. Financial Times publication, FT Adviser, exposed the high level of intervention following a Freedom of Information request (FoI) by the journal.
Earlier this year the FCA said that PII cover remained available to IFAs despite the Covid-19 pandemic crisis and that it was not preventing insurers from undertaking renewals. It insisted that financial advisers must have PII in place to continue to practice. However, the regulator conceded that if it saw evidence that insurers’ ability to process renewals was being affected, it would consider taking action.
It has also been reported by FT Adviser that the FCA permitted an advice firm to complete nine DB pensions, despite the work being excluded from the firm’s insurance. A report by the Financial Regulator’s Complaints Commissioner acknowledges that the firm had agreed not to take on any new DB business once it had completed its pipeline work.
James Burgoyne, Director – Claims & Technical, Brunel Professions says that PII cover is available to financial advice firms, but that it is important that they present their business to insurers in a clear and transparent manner to receive the best quotes. “Insurers are concerned about some aspects of the financial advice market, particularly given the FCA’s scrutiny of DB pension transfers, and the previous Pension Review in the 1990s which was costly for both advisers and the insurance market. We are working closely with our clients to present their businesses to insurers in a positive light and demonstrate effective risk management procedures.”
FTAdviser’s report on its FoI request is available on its website. The FCA’s position on professional indemnity insurance and the Complainants Commissioners’ report have been published on the organisations’ websites.
Brunel secures competitive professional indemnity insurance cover for financial services professionals. To find out more visit the Brunel website or call Mark Sommariva on 0203 475 3275.