Pension wrangle delays redress
Wednesday 13 September 1995
Indemnity insurers are refusing to cover financial advisers who volunteer to clients that they may be entitled to compensation for bad advice.
Members of the PIA board, which met recently, are now preparing to take legal action against one or more indemnity insurer in an attempt to break up the logjam. Colette Bowe, the regulator's chief executive, is understood to want the matter settled as soon as possible.
A PIA source said yesterday: "We are taking the matter very seriously. There are a number of options being considered. A decision will be made within weeks."
The dispute has led most independent financial advisers to refuse to give the PIA details of clients who may have been wrongly advised in case it invalidates the professional indemnity insurance needed to meet claims against them.
Thousands of IFAs have so far failed to meet the 1 September deadline set for them to provide the regulator with details of pension transfers on which they have advised.
The PIA's new legal move follows an earlier court battle over the same issue between the financial advisers' trade body, the IFA Association, and the Securities and Investments Board, the senior City regulator that oversees the PIA. The judgment was supposed to settle the case but it also allowed financial advisers to cite fears of losing their indemnity cover as a reason for refusing to give out information. This loophole has reopened the entire case.
At stake are compensation payments potentially worth hundreds of millions of pounds. If indemnity insurers refuse to pay, IFAs who cannot foot the bill themselves would be forced out of business. Their clients would then have to obtain redress from the industry's safety net, the Investors Compensation Scheme, which can take years.
The ICS has itself been the subject of a separate legal challenge by the Bristol-based insurer Sun Life, which was resolved in the scheme's favour last month. Sun Life yesterday announced it will not appeal against the judicial review decision, thus allowing a pounds 15.8m compensation levy to go ahead.
Despite this, Ian Boscoe, a director at Pointon York Vos, the largest PI broker for financial advisers, said: "I think many indemnity providers are sick of being dumped on. Ironically, the document that IFAs now appear to be refusing to send in should not pose a threat to their indemnity cover in that it does not require them to supply details of individual pension transfer cases." The PIA has said advisers can give details of their clients to a new pensions unit, which will contact them instead. It has obtained counsel's opinion saying cover would not be invalidated if they do so.
Gareth Marr, managing director of financial adviser Moors Marr Bradley and a member of the PIA pensions committee, said: "What happens if the legal advice is wrong? Many advisers are unwilling to take the risk."
- 1 Tunisia hotel attack: Locals form 'human shield' to protect hotel from gunman Seifeddine Rezgui
- 2 Greece crisis: Alexis Tsipras accepts troika bailout proposals with conditions
- 3 German ethics council calls for incest between siblings to be legalised by Government
- 4 French woman dies in freak bungee jumping accident
- 5 Facebook rainbow profile pictures likely being tracked by social network
Tunisia hotel attack: Locals form 'human shield' to protect hotel from gunman Seifeddine Rezgui
Russian officials ban yoga because it's too much like a religious cult
Greece crisis: Alexis Tsipras accepts troika bailout proposals with conditions
German ethics council calls for incest between siblings to be legalised by Government
Britain First insist their videos aren't racist in bizarre attack on comedian Jason Manford
The moment a Queen's Guard soldier lost it and drew his gun at annoying tourist
Greece crisis: IMF was pushed around by Angela Merkel and Nicholas Sarkozy – and now it is being humiliated
Greece crisis: The wider lesson is that it’s time to abandon this failed experiment in currencies
'I wish the BBC would stop calling it Islamic State' – David Cameron unleashes frustration at broadcaster
Pentagon accuses Russia of 'playing with fire' over nuclear threats towards Nato
They are neither a 'state' nor 'Islamic': Why we shouldn't call them Isis, Isil or IS
iJobs Money & Business
£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...
£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....
£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...
£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...