Although the country as a whole clearly has much bigger priorities right now and health is more important than wealth, it is still important that every sector of the economy takes steps to mitigate the impact of the current crisis.
In our case the sector is controlled by the FCA and the financial fall out will be creating additional anxiety and concern for millions of consumers, many of whom rely on and turn to their advisers. So we have an important role to play.
There are some simple measures the FCA could and should quickly announce to instill confidence within the advice sector and primarily to ensure we can redirect resources towards fully supporting all our clients and keeping our businesses intact and functioning through the coming months
1. Suspend minimum capital adequacy requirements temporarily.
We all have these reserves for a reason which is to be able to use them to support our business in difficult times, so we now need to be able to access these reserves without fear of being hounded for breaching the limits.
2. Suspend the six monthly RMAR returns this half year. They will be a pointless distraction with no tangible benefits for consumers in current circumstances.
3. Suspend the 10 per cent drop notification. In the current climate they are out of date before they are even received by clients so serve no useful purpose but might add to client anxiety and confusion.
It is more effective that we use our time to talk to clients and provide a more individual and contextual review.
4. Temporarily provide firms (who need it) with a three month window to secure professional indemnity (PI) cover at renewal given the ever hardening and difficult market.
From what I have seen so far, this year’s renewal proposals are substantially more complex and seek microscopic information from decades ago that CRMs just didn’t (and in some cases still don’t) cater for.
The process will inevitably be more manual and longer at a time when, (especially smaller) firms won’t have spare human resource to throw at it.
5. Finally and potentially the most problematic in months to come I fear, the FCA need to find a way to create confidence in PI insurers and advice firms that complaints uniquely about investment losses in these historically unprecedented times will not be judged as they would under normal circumstances or with the benefit of hindsight.
That is not to say that clients exposed to risk incorrectly should not still be able to seek recourse, of course they should, but there is clearly a need to acknowledge the unique circumstances we all face and to somehow craft a confidence-inspiring statement that confirms a common sense approach will be applied.
If not I doubt any PI underwriter will want to renew anything.
Paul Harding is a director at Chevening Financial