From Adviser Guide: Independent vs Restricted
Q: What impact will being restricted have on PI insurance?
For legacy business there will be very little impact, according to George Higginson, chief executive of Sesame Bankhall Group.
In terms of the future impact, Mr Higginson said this will depend on the nature of the restricted proposition.
If high risk advice is excluded from the proposition, Mr Higginson said in time this may mean lower PI premiums for the firm.
But on a direct comparison with independent advice, Andrew Power, lead Retail Distribution Review partner at Deloitte, said the reduced scope of restricted should reduce the potential for unsuitable advice/maladministration.
He said being restricted therefore may result in a comparatively lower premium for restricted firms compared to independent advice firms.
In addition, he said the increase in professionalism of all advisers could have a downward impact on professional indemnity insurance premiums as the likelihood of poor advice should reduce.
However, Mr Power said any increased costs will need to be factored in the cost of advice are therefore recovered from adviser charges levied on clients.