Gareth Jones from Brunel Professions provides an update on the recent changes to the Financial Ombudsman compensation limits and it's impact on brokers Professional Indemnity insurance cover.
As a broker regulated by the FCA, there has always been a maximum limit of compensation available to your client to whom has lodged a complaint using the formal channel of the Financial Ombudsman Service (FOS).
Historically this has sat at £150,000 for you however the FOS have now introduced an increase to this compensatory limit effective 1st April 2019.
As of the 1st April, this FOS limit has increased to £350,000 for all consumers and businesses. As a broker, this means the complainant that has approached the FOS on or after this date will be potentially eligible to claim compensation up to £350,000. If however you are in the midst of dealing with a complaint having occurred before this date, the FOS will still be increasing the limit to £160,000, albeit a marginal amount for them. This limit in turn, will also now be adjusted on an annual basis in line with inflation.
In the world of ever changing FCA regulation, how does this affect your professional indemnity cover?
Well, whether you outsource your compliance to a third party or prefer to deal with it yourself as a point of reference, there is certainly a list of pre-requisites that are required by the FCA in regards to your professional indemnity policy.
When approaching your renewal date, your broker should be highlighting this aspect of FOS coverage with you when reviewing your business needs and requirements.
A point to make here is that this amendment to the FOS compensatory limit is not an optional condition or element of cover for which insurers adopt. As such, this new limit should be reflected within all policy wordings going forward however you may consider discussing this with your broker.
The differing elements of cover and endorsements available within brokers’ PI can be somewhat laborious for you when having to review your renewal and compare policy wordings. In essence, this is why using a specialised PI broker is recommended so that any potential issues in coverage can be addressed.
All insurers offering cover for you this year will have reflected this FOS amendment in their terms, so at least this is one less element of cover you needn’t worry about at your renewal.
Brunel is an independent broker and has access to a wide range of insurers who can offer extensive cover for insurance brokers, whether you are dealing with predominantly private medical, combined or commercial lines.
If you have any queries or wish to discuss the implications of the aforementioned, then please feel free to contact Gareth Jones on 0203 475 3286 or email@example.com.