Too little time to prepare for Fos awards

Marlene Outrim

Marlene Outrim

At the end of March the Financial Conduct Authority sent an email to financial advisers at what is often the busiest time of the financial year, confirming the increase to the Financial Ombudsman Service's binding award limits. 

These were changed to:

• £350,000 for complaints about acts or omissions on or after April 1 2019;

• £160,000 for complaints about acts or omissions before April 1.

Our compliance company spelt out what this means. Essentially, our professional indemnity insurance policy should cover us for awards made by Fos, and the company will cover awards up to £150,000 on any advice made at the time of the policy renewal.

But due to the large increase from £150,000 to potentially £350,000, insurers are now considering their position.

Having contacted our PI insurer to get clarification on what level of cover it will provide post April 1 2019 and what this covers, such as defined benefit transfers, we received a reply to the effect that it was meeting with the FCA and Fos to seek clarification.

Meanwhile, the insurer will cover the new limits, but not for DB pension transfers transacted after April 1, for the moment. Even if it does, in due course, accept cover, it is surely going to mean higher premiums and an alteration to the terms and conditions.

While reviewing the news on BBC Radio Wales on the morning of March 30, I commented on the London Capital & Finance debacle, for which, no doubt, good advisers will foot the bill for what are someone else’s misdemeanours, fraud and deceit.

It now seems that those conforming to the rules and regulations and acting in the best interests of the clients will be subsidising compensation required for those badly advised on DB transfers, especially the members of the British Steel Pension Scheme.

But it is not just that which makes me angry; it is the lack of time and consideration that we advisers have been given to put into place something over which we have little control. And then what about the clients who need the advice?

Is this a means of restricting the advice on DB transfers or just another way of filling the coffers to pay someone else?

Marlene Outrim is managing director of Uniq Family Wealth