The Personal Finance Society (PFS) has called on the Financial Conduct Authority (FCA) and HM Treasury to grant financial advisers a four-month waiver if they need to renew their professional indemnity insurance (PII) during the coronavirus lockdown.
The Society is concerned that renewals are being impacted by the lockdown amid evidence that the availability of PII is reducing. The PFS also wants HM Treasury to act as reinsurer of last resort for PII ahead of a wider review of PII and the Financial Services Compensation Scheme funding.
James Burgoyne, Director – Claims & Technical of Brunel Professions understands the PFS’ concerns but believes that the Society may have identified the wrong reasons for the difficulties faced by IFAs in obtaining PII. “The FCA’s probes into Defined Benefit pension transfers, the increase in the limit of the FOS award to £350,000 and a significant wider readjustment in the PII market are all readily identifiable reasons for problems in obtaining a quotation. These are not Coronavirus related. In fact, insurance brokers are a sector of the market less affected by current restrictions as much of our work can be continued remotely,” he said.
The PFS has asked the regulators to consider further moves to support financial advisers. These include confirming that the government’s business loan scheme will not breach a firm’s capital adequacy requirements, extending the deadlines for advisers to achieve qualifications and relaxing the requirement to notify clients when their investments fall by more than 10 per cent.
Keith Richards, chief executive of the Personal Finance Society, said: “These are unprecedented times and to better meet the demand for more financial advice from impacted consumers, advisers will need help from the government and regulator. Over the coming months, the focus for all stakeholders must be on maximising the amount of time advisers can spend dealing with client needs, especially those in desperate need of the profession’s help.”
The FCA has already confirmed that it will provide financial flexibility to regulated firms during the outbreak and will allow them to use capital and liquidity buffers to support the continuation of the firm’s activities.
The PFS has published its press release on its website. Reports about its call for action have been published by FT Adviser, and Financial Planning Today. The FCA has published its expectations of financial resilience for firms on its website.
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.