Reforming the FSCS levy
18 February 2020
18 December 2023
Personal Finance Society
Since our email last week almost 3,000 members have downloaded the template document with advice on how to engage their MP.
We have also received further evidence of increased professional indemnity (PI) insurance premiums and restricted cover that is causing firms to turn away clients needing government mandated advice on defined benefit pension transfer advice. There is also evidence that advisers are facing a growing barrage of questions to obtain cover and massive delays in receiving quotes.
Brokers are blaming the shrinking number of PI insurers which they say is causing remaining providers to struggle to process applications swiftly. One financial advice firm revealed that their PI premiums have leapt from £3,700 in 2009 to £45,000 in 2019. These soaring premiums and restrictions to cover are presenting real challenges for firms, some of which carry a risk of being pushed into bankruptcy by a single compensation claim.
Keith Richards, chief executive of the PFS, said:
"Financial advisers who have never had a single complaint made against them are being frozen out of the defined benefit pension transfer market because of PI premium hikes and restrictions on cover. Problems with PI cover are causing financial advisers to exit the defined benefit pension transfer market and limiting the public's ability to access the financial advice they need to exercise pension freedoms. We are sharing this evidence with the Financial Conduct Authority and HM Treasury as part of our renewed calls for an alternative to the current professional indemnity insurance market and Financial Services Compensation Scheme compensation scheme levy."
We are also supporting trade publication, Professional Adviser’s, campaign for a fairer FSCS levy, under their banner of ‘The good guys shouldn’t pay’. Professional adviser has asked that Personal Finance Society members to send their FSCS levy & PII stories for, if they are happy for them to be published, to firstname.lastname@example.org.
This document is believed to be accurate but is not intended as a basis of knowledge upon which advice can be given. Neither the author (personal or corporate), the CII group, local institute or Society, or any of the officers or employees of those organisations accept any responsibility for any loss occasioned to any person acting or refraining from action as a result of the data or opinions included in this material. Opinions expressed are those of the author or authors and not necessarily those of the CII group, local institutes, or Societies.