Reaching retirement does not spell the end of the need for Professional Indemnity (PI) insurance if you are an independent financial adviser (IFA), fresh guidance from the insurance industry suggests.

A joint Viewpoint on Succession Planning, published by the Association of Independent Financial Advisers (AIFA) and the Association of Mortgage Intermediaries (AMI), suggests retired IFAs still need to purchase comprehensive Professional Indemnity insurance at competitive rates.

PYV's Chief Executive, Neil Pointon, advises that "as PI is arranged on a 'claims made basis' any cover that may have been in force while the IFA was actively trading and has then been allowed to lapse will subsequently provide no further cover for any freshly discovered circumstances or claims, that is why it is important to maintain a live 'run-off cover' policy in force as long as you are legally exposed".

The guidance was provided in the document regarding their ongoing liability, protection of assets and the ownership of clients as part of succession planning.

AIFA deputy director Fay Goddard said the process of exiting an industry that is regulated is "quite complex", something that is reiterated by AMI director Richard Farr.

"You will still be subject to conduct of business and all relevant FSA rules but will have different capital and PI requirements to non-MiFID firms," AIFA adds.

IFAs were recently described by AIFA as the "most trusted source of financial information".

The trade organisation was commenting on the Thoresen Review of Generic Financial Advice and highlighted specialist advisers are uniquely placed to "improve the financial wealth of the nation".

As reported in New Model Adviser on 25th February, PYV has recently created a new 'Run-off cover option' specifically to improve the availability of this form of cover to those IFAs that are considering ceasing to carry on regulated business.

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.

© Adfero Ltd