Only 17% of advice bosses confident in securing affordable PI cover
Only 17% of advisory and wealth firm bosses are confident they can secure affordable professional indemnity insurance in the future, according to the Personal Investment Management & Financial Advice association (Pimfa).
The survey of 84 business owners and chief executives of member firms of Pimfa, the trade association for the wealth management and financial advice industry, also revealed over half (56%) of its members reported their PII contained significant restrictions, including on historic advice related to Defined Benefit (DB) transfers, leaving firms without cover for advice given before the insurance policy began.
The trade body said the shrinking availability of cover meant its members felt they were being "penalised twice" alongside exponential increases in their regulatory bills. Financial Services Compensation Scheme (FSCS) levy payments allied to PI premiums were in a few cases as much as 600% of their FSCS levy bill, the trade body revealed.
Advisers are increasingly concerned about their ability to gain comprehensive cover"
Tim Fassam, director of government relations and policy at Pimfa, said: "Advisers are increasingly concerned about their ability to gain comprehensive cover, which not only harms their ability to operate in future, but also represents a barrier to new entrants into the market.
"This only feeds into concerns we have about businesses failing as a result of claims, and falling onto the FSCS as a result."
The findings of this research show significant rises in the cost of PI insurance with 26% of respondents reporting premiums increased by over 100% over the past five years.
The trade body's research found 82% said FSCS costs now accounted for at least 20% of their outgoings, excluding payroll and accommodation costs.
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