The Personal Finance Society (PFS) is calling on both the Financial Conduct Authority (FCA) and HM Treasury to relieve the pressure on advisers seeking professional indemnity (PI) insurance in the midst of the coronavirus pandemic.
This comes after International Adviser reported on one advice firm’s PI cover premiums increasing by 400% compared to 2019.
The professional body has written to the regulator and government urging them to introduce temporary measures to ease the pressures advisers are facing in obtaining “affordable, comprehensive” PI cover.
It has asked for a four-month waiver for advice firms seeking PI cover and for HM Treasury to consider “acting as reinsurer of last resort for cover for financial advice firms”.
On 21 April, the FCA said that advisers still need to have PI insurance policies in place during the covid-19 outbreak in accordance with its rules.
Frustrating to hear
Keith Richards, chief executive of the PFS, said: “While we acknowledge the FCA and HM Treasury have a list of urgent priorities at present, the challenges being faced by advice firms, with pending PI insurance renewals and those who have had little option but to accept unacceptable terms or cease trading, is leaving the sector and consumers exposed.
“We welcomed the FCA’s pragmatic introduction of crisis reaction measures, such as suspending the 10% reporting rule and extension to key deadlines, but the crisis of PI insurance and consequential impact on the Financial Services Compensation Scheme (FSCS) remains at odds.
“Advisers across the country are doing a great job supporting their clients in these unprecedented times so it is frustrating to hear from many of them that the ever-present problem for the profession, obtaining affordable, comprehensive PI insurance continues.
“Amid the current crisis, financial advice is more important than ever before and we cannot as a society afford to lose such valuable services, which is why action both short and long-term is required.”
