PII – what to do?

Life as an IFA is not easy in an era of collapsing equity markets and in 2002 it became considerably harder as the sector struggled to secure professional indemnity cover in the face of a global capacity shortage and more specific underwriter concerns about potential future payouts for past mis-selling. The FSA responded last November with a short-term modification of the evidential provision for maintenance of PII cover contained in IPRU (INV) Appendix 13(2) E. This temporary solution expires in June 2003 and the FSA would like, with some slight adjustments, to make it a permanent rule change. Under the revision, claims would be subject to an excess on an “each and every claim/each and every claimant basis” and on an “each cause basis” when documents were lost or there was dishonesty on the part of the insured. The excess would also apply to defence costs for claims against the personal investment firm. Minimum insurance requirements would be those that were relevant when the policy was taken out or renewed and any rule changes in the interim would not apply.