Professional indemnity cover 'could be hit' by FOS limit increase

19/03/2010

Written by Tom Davis

Increasing the limit on payouts from the Financial Ombudsman Service (FOS) could lead to a rise in professional indemnity insurance rates.

The Financial Services Authority is planning to consult later this year on whether the limit on awards from the FOS should be raised from £100,000.

However, Neil Pointon, chief executive of specialist insurance broker PYV, warns in an interview with Money Marketing that any such move would not be easy to stomach for regulated professionals or for their insurers.

He tells the publication: "More Claimants will go to the FOS because it is cheaper to sue as there are less legal fees involved, if any.

"It is handled by correspondence and, if they are not happy with the judgment, they can take it to court afterwards."

The FOS says in its corporate plan that cases where "the stakes are high" can lead to its work becoming slowed down by the complexities of the case and the more rigorous defence that is put forward.

Any increase, however, would appear to be a move away from the perceived purpose of the FOS as to be there to provide small claimants with quick and easy justice.


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