06 May 2014
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A third of advisers offered renewals of their Professional Indemnity Insurance (PII) received increased premiums, the Association of Professional Financial Advisers (APFA) has found.
Research of 271 advisers, carried out for APFA by NMG Consulting, found these premiums have increased by 14% on average.
APFA said these figures highlighted the importance of a long-stop for financial advice, which the adviser body lobbied for, resulting in recent Financial Conduct Authority confirmation of a review into the long-stop.
Meanwhile, over two-fifths (44%) of advisers have received the same premium as last year, and only 8% have been offered a reduced premium.
Chris Hannant, director general at APFA (pictured), said: "These findings offer further evidence of a hardening insurance market for advisers, driven by a compensation culture and the legacy of events like Arch Cru, Keydata and Catalyst. They also highlight further the need for a longstop for advisers. Without one, the liabilities of companies have no limit, and therefore when insurers calculate risk it is open-ended - which drives premiums up.
"The FCA has said that it plans to consider the case for a 15-year long stop on complaints to the Financial Ombudsman service for personal investment firms during the next twelve months. This is something we've long campaigned for and would be a huge step forward for the industry."
