RDR 'is human rights violation' - Professional Indemnity (PI) insurance for IFAs (claims)

11/06/2009

Written by Neil Pointon

Moves by the Financial Services Authority and the Financial Ombudsman Service (FOS) not to incorporate a 15-year long stop within the retail distribution review (RDR) is in violation of independent financial advisers' (IFAs) human rights, it has been suggested.

The decision not to enforce a deadline on Professional Indemnity ( PI) claims is, according Guildhall Chambers barrister John Virgo, a breach of article six of the Human Rights Act 1998 as it deprives IFAs of a means of defence, FinancialAdviser reports.

Indeed, Simon Mansell, managing director of Worcester-based IFA Temple Bar, wrote a letter to Andrew Dismore MP, chairman of the joint committee on human rights, stating that providing a long stop "will immediately halt the many spurious and vexatious complaints made in an endeavour to make money".

However, Lord Hunt of Wirral in his FOS review published last year claimed that introducing a deadline would be untenable with the terms of the treating customers fairly system.

Despite this he points out: "I have some sympathy with advisers who have left the market some years ago, but feel that they remain at risk from complaints and hence maintain expensive professional indemnity cover."

Robert Bass, PYV's director of claims, added: "The fifteen-year longstop was brought in as part of the Latent Damage Act 1986 and provides the security of a time-bar for professionals. Fifteen years is a long time and if such a time-bar is not recognised by FSA/FOS it will place the advising profession in a uniquely unfair position. Clearly this is untenable for them."

Concerns about the RDR were recently shown in research by Pinsent Masons which revealed 48 per cent of IFAs are dissatisfied with the RDR's proposals.

Click here for more information about Professional Indemnity insurance for IFAs.

Click here for more information about Professional Indemnity in general.

Click here for more information about Professional Indemnity in general.
PYV are one of the UK's leading providers of professional indemnity insurance. This news article has been produced by Adfero in collaboration with PYV and its unauthorised use is not permitted.

(c) 2009 Adfero Ltd.

Click here to go back to archive list