One commercial insurance broker has recently warned advisers to check their professional indemnity insurance cover before the Financial Ombudsman Service’s new award limit increase goes into effect this coming January to ensure they are protected.
Business liability insurance specialists Howden Insurance Brokers issued the warning in light of the Financial Services Authority raising the FOS award limit to £150,000 from the beginning of next year. Neil Pointon, retail director for Howden, remarked that the lion’s share of professional indemnity policies state that the FOS adjudication maximum limit is only £100,000.
Mr Pointon said that advisers may end up being held accountable for the extra £50,000 if they neglect to both check and update their policies to reflect the new limit. Underwriters will most likely agree to the new limit, the retail director added, though grudgingly so.
This past month, the FSA also revealed new rules for the handling of complaints, abolishing the current ‘two stage’ process at the same time. The new changes mean that adviser firms can no longer issue provisional findings but must respond to complaints brought by consumers with a final decision immediately.
The FSA says that this will make sure that complaints are resolved fairly by firms by discouraging dismissal of complainant upon first contact with them. These changes are scheduled to be introduced in July of next year.
Mr Pointon remarked that the complaint process streamlining, combined with the increase to the award limit, will most likely end up raising premium prices for advisers. These changes will undoubtedly increase premiums, he added, but with enough competition in the marketplace, costs should not get unreasonable.