Do Financial Advisers require Professional Indemnity Insurance?
The simple answer is ‘yes’. The Financial Conduct Authority (FCA) sets out in the Interim Prudential sourcebook for Investment Businesses (IPRU-INV 13) that all personal investment firms must take out and maintain Professional Indemnity Insurance (PII) at all times. The FCA rules do not go as far as to recommend minimum terms for cover, although they do state that the policy must not be subject to conditions or exclusions which unnecessarily limit its cover, and a contract of insurance must meet the demands and needs of the firm it is being issued to. As such, your choice of insurer is key to the effectiveness of your PII.
What does PII cover a Financial Adviser for?
The purpose of the professional indemnity is to cover the firm for claims made against it by a third party primarily for professional negligence and civil liability. The policy will also cover for defence costs and expenses incurred in defending a claim. In addition the policy will also cover you for any award made against the firm by the Financial Ombudsman Service (FOS).
Where a complaint arises against your firm which becomes claim, it can be both time consuming and expensive to defend. Financial Adviser PII ensures you can maintain the smooth running of your business while knowing the defence and claim resolution is being handled by our experts.