Your IndustryOct 2 2018

British Steel lawyer calls for PI changes

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
British Steel lawyer calls for PI changes

The professional indemnity (PI) insurance market will need to be fixed to address the problems exposed by the British Steel case, according to the lawyer representing dozens of steelworkers.

Speaking at the Chartered Institute for Securities & Investments financial planning conference this morning (2 October), Philippa Hann, partner at law firm Clarke Wilmott, said advisers may not be in a position to solve problems such as those happening in the aftermath of the British Steel pension scheme restructure without their PI insurance changing.

She called for mandatory wordings within policies or some form of pooled insurance to keep the cost down.

Following the restructure of the British Steel Pension Scheme, steelworkers became a target of unregulated introducers and advisers keen to capitalise on their transferring out, while it was reported regulated advisers were at capacity and unable to take the steelworkers on.

Clarke Wilmott has since been appointed by a group of 70 steelworkers in Port Talbot to pursue a legal case against parties involved in the debacle.

Ms Hann said: "You end up in a situation where you are advising on something and a year later, when it turns out there is a problem, it is excluded from the policy.

"If we want some good news stories we need mandatory wordings within PI policies or some form of pooled insurance in place."

The regulator had considered the introduction of mandatory PI policy wording as part of its DB transfer advice review but later dropped the idea, saying it would negatively impact on the FSCS levy.

Ms Hann said: "The British Steel Pension Scheme stuff was a perfect storm. We also have to acknowledge that people don't behave in the way that benefits them most.

"I don't think we can solve the problem. A lot of lawyers do pro bono work but are we going to solve the legal advice gap? No. I don't think the regulation is stopping you. For me the biggest issue with the financial services sector is insurance, which is woefully inadequate for firms."

It has emerged in recent months that advisers are struggling to renew their PI insurance cover if they hold pension transfer permissions.

Robin Keyte, a financial planner and member of the FCA's small business panel, said: "One of the problems associated with negotiating with PI underwriters is that financial advice PI is a very small market so we don't have the whip hand we might want.

"I would like the FCA to find a way to solve this, but I do share Philippa's concerns."

Gretchen Betts, the president of the CISI's Wales branch, added: "There are many people who want to do transfers and want to charge fair fees but when you are looking at the cost of the increases to PI and the excesses they are put off.

"Our policy had a weird limit where if we went over five in the first six months we had to tell them."

damian.fantato@ft.com