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Clerical loans for IFAs to pay PI and regulatory fees

Clerical Medical is introducing a new insurance premium funding product offering advisers loans to pay regulatory levies and professional indemnity insurance premiums in instalments.

The loan does not require security and can be repaid quarterly, or in six or 10 monthly instalments. Interest rates on repayments are fixed, depending on the loan term and amount.

It will allow firms to spread the cost of all types of commercial insurance premiums and regulatory costs to ease cashflow and allow working capital to be used efficiently.

Clerical is promoting the product for advisers to use themselves and to offer to corporate clients. The minimum amount that can be borrowed is 1,000 and there is no maximum level.

The offer comes after a huge 50 per cent increase in the IFA levy for the Financial Services Compensation Scheme and rises in FSA fees.

Aifa director general David Severn believes the rises coupled with continuing difficulties in getting PI insur- ance cover could put firms out of business.

Clerical is also offering the product with its commission accelerator, which is aimed at smoothing the income and costs to the adviser.

Clerical head of market development Charles Evans says the IPF product is offered through its intermediary support programme, Advice Matters, which comprises support services and products to help advisers in running and developing their business.

Evans says: “IPF will take the sting out of paying for insurance premiums in lump sums, especially FSA levies and PI insurance premiums, by spreading the burden with the ease of instalments. It is another step towards Clerical providing complete support to financial advisers in a challenging and continually evolving marketplace.”

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