FSA rules out 15-year limit for complaints - Professional Indemnity (PI) for IFAs

8/12/2008

The Financial Services Authority (FSA) has decided against introducing a 15-year deadline for clients to file complaints against advisers, it has been revealed, a move that could have helped in minimising future Professional Indemnity (PI) insurance premiums.

In its recently published distribution review, the authority stated that the introduction of the long-stop - which had particularly been called for by advisers with large legacy businesses - would have undermined consumer confidence within the sector, City Wire reports.

Commenting in the report, the FSA said: "We recognise the strength of feeling on this issue, particularly in the IFA community. We recognise that many in the industry will be deeply disappointed by this decision."

Furthermore, it was stated that introducing such a deadline could cause significant "consumer detriment and reputational damage" for FSA regulated firms.

An interim report by the Financial Ombudsman Service indicated that if the long-stop had been introduced then an estimated 2,000 complaints would have been blocked every year.

PYV's claims director, Robert Bass commented: "By leaving the door open for claims to be made against advisers the FSA is denying IFAs and insurance brokers the protection afforded by law. Leaving aside the question of whether this is fair or not, the more obvious effects are that IFAs and brokers will need to retain their documents indefinitely thus increasing their storage costs and insurers might well feel the need to increase premiums to reflect the longer period of exposure they face. This does not seem to be in the interests of the industry."

Earlier this month, Neil Pointon, Chief Executive of specialist Lloyd's broker PYV, stated that advisers may be set for an increase in PI premiums, as the strength of the pound declines against the euro, Money Marketing reported.

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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) 2008 Adfero Ltd.

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