Robert Sinclair, CEO of the Association of Mortgage Intermediaries (AMI) has badged a three-week implementation deadline for higher professional indeminity insurance (PII) coverage effective today as ‘unreasonable’ in a letter sent to advisers last week.
The letter said: “We are sorry for the delay in updating you on this but we have been in communication with the FCA in order to try to avoid this outcome. We consider three weeks to implement a policy statement as totally unreasonable and that the FCA has not effectively communicated the impacts.”
Sinclair said: “It is clear that this was never a consultation and that it was always the intention to deliver this change. We are raising our concerns over this at the highest level.”
The regulator published a consultation paper, CP18/31 in October 2018, followed by its ruling on 8 March to raise the Ombudsman’s award limit for complaints by firms to £350,000, up from £150,000.
For any complaints referred to the Ombudsman before 1 April 2019 the old limit of £150, 000 remains.
Also, from today, both award limits will be automatically adjusted each year in line with inflation, dictated by the Consumer Prices Index (CPI).
Act now if vulnerable
AMI said that if a broker’s PII cover has no limit then there will be no need to take action before renewal. However, if the policy has a limit of £150,000, then the adviser will need to obtain new cover or have sufficient capital buffer to cover any shortfall.
The FCA has urged any firms unable to secure suitable cover to contact their insurance broker and notify the FCA as soon as possible. Firms who do not have a dedicated supervisor should communicate with the contact centre.
The regulator said it will consider the circumstances on a case by case basis and may offer firms a ‘grace period’ while they obtain suitable cover.
These firms should also appropriately manage any risks arising from gaps in their PII coverage in the interim, it said.
The FCA said: “We recognise that this is a reasonably short implementation period. However, in October 2018 we published our Consultation Paper CP18/31 which consulted on increasing the award limit on 1 April 2019.
“This was so the change could come into force at the same time as the extension of the ombudsman service to larger small and medium-sized enterprises, which we considered a logical approach.”