Advice firms insured through Collegiate are set to miss the FCA’s deadline for information on its PI cover because the insurer has been overwhelmed with defined benefit (DB) insurance applications from policyholders.
In late March, the Financial Conduct Authority (FCA) sent advisers an email on potential changes to their professional indemnity (PI) cover just three days before the Financial Ombudsman Service (FOS) awards limit increased from £150,000 to £350,000 on 1 April.
The regulator recommended firms check their PI policy provided cover for the new awards limit and said that, if firms were unsure about their cover, they should speak to their insurer or broker as soon as possible.
The financial watchdog went on to say that, if the insurance policy did not provide compliant cover, firms should complete an online form within five working days – giving them until 5 April – to notify the regulator and let it know when the firm intended to obtain valid insurance.
RP’s sister title Professional Adviser has seen correspondence between insurance provider Collegiate and policyholders in which the PI firm admitted it was unlikely advisers would be able to notify the FCA of whether their PI insurance provides compliant cover by 5 April due to the “volume of enquiries” it has received.
In its correspondence, Collegiate said: “If you have returned a completed questionnaire with regards to increasing the limit for FOS binding awards for transfers from DB pensions schemes, thank you for doing so.
“We appreciate the urgency of this matter and I can assure you that all efforts are being made to respond to all enquiries as quickly as possible.
“However, due to the volume of enquiries received concerning this matter since the FCA’s email last Friday night, it is unlikely that we will be able to respond to everyone by 5 April, when the FCA has requested completion of their questionnaire.”
The PI provider offered some stock responses to give to the FCA – acknowledging it would cover DB transfers to a limit of £160,000, that Collegiate had requested additional information from the FCA regarding the £350,000, and that it would respond fully by the end of April 2019.
Earlier this month, Professional Adviser reported Collegiate had asked policyholders to complete a questionnaire if they wanted to continue arranging DB pension transfers after 1 April, when the new limit kicked in. It said it would “consider” providing cover for the increased limit, subject to the completion of a questionnaire.
The questionnaire asked advisers how many DB transfers they had carried out before 1 April, what the average value was and what their largest transfer value has been.
Professional Adviser contacted Collegiate and the FCA for comment.