Professional Adviser (24/06/2019) -Some financial advisers still do not have full professional indemnity (PI) cover following the increase to the maximum compensation award that can be offered by the FOS, PA understands.
The Financial Ombudsman Service (FOS) compensation award limit rose from £150,000 to £350,000 on 1 April – nearly three months ago – making some PI policies invalid.
A few days before the FOS award increase, the Financial Conduct Authority (FCA) said firms without compliant cover should complete an online form within five working days to notify the FCA and let it know when the firm intended to obtain valid insurance.
The financial watchdog said it was willing to allow firms that followed its instructions time to obtain different PI cover following the increase.
PA now understands, however, that due to the complexities involved in underwriting for PI insurance and the volume of firms seeking new cover following the changes at the FOS, some firms do not have valid insurance in place to deal with DB transfers.
PA also understands it could take until each firm has renewed their cover to be sure all firms have fully compliant PI insurance in place.
IFS Wealth & Pensions director and Chartered financial planner Ricky Chan said it was likely any advisers not covered for the additional FOS limit would have pulled out of the DB transfer market.
“I don’t personally know of any DB transfer firms that are still operating without full PI insurance in place,” he added.