The professional body for the UK’s financial planning profession, the Personal Finance Society (PFS), has called on regulators to grant financial advisers a waiver if they need to renew their professional indemnity insurance (PII) during the coronavirus lockdown.
The Society is concerned that renewals are being impacted by the lockdown amid evidence that the availability of PII is reducing. It has asked the Financial Conduct Authority (FCA) and HM Treasury to grant a four-month PII waiver to all financial advisers.
James Burgoyne of Brunel Professions believes that the PFS may have identified the wrong reasons for the difficulties faced by IFAs in obtaining PII. “The FCA’s probes into Defined Benefit pension transfers, the increase in the limit of the FOS award to £350,000 and a significant wider readjustment in the PII market are all readily identifiable reasons for problems in obtaining a quotation,” he said. “These are not Coronavirus related. In fact, insurance brokers are a sector of the market less affected by current restrictions as much of our work can be continued remotely,” he added.
In a further move, the Society wants HM Treasury to act as ‘reinsurer of last resort’ for PII. It says it wants the Treasury to step in until the planned review of consumer compensation is completed.
The PFS is calling on regulators to relax additional rules during the outbreak. It wants deadlines for advisers to achieve qualifications to be extended and a relaxation of the requirement to notify clients when their investments fall by more than 10 per cent. It has also asked for confirmation that the government’s business loan scheme will not breach a firm’s capital adequacy requirements.
“These are unprecedented times and to better meet the demand for more financial advice from impacted consumers, advisers will need help from the government and regulator,” said Keith Richards, chief executive of the Personal Finance Society. “Over the coming months, the focus for all stakeholders must be on maximising the amount of time advisers can spend dealing with client needs, especially those in desperate need of the profession’s help,” he added.
Separately, the FCA has confirmed that it will provide financial flexibility to regulated firms during the outbreak and will allow them to use capital and liquidity buffers to support the continuation of the firm’s activities.
The PFS has published its press release on its website. Reports about its call for action have been published by FT Adviser and Financial Planning Today. The FCA has published its expectations of financial resilience for firms on its website.
Categorised in: Financial Services PI News
This post was written by James Burgoyne