For the IFA, what has already occurred in the pension review?
The Government offer that produced an exodus of Serps opt-outs.
The SIB assumption that all final-salary schemes would be in existence at normal retirement date to provide a guaranteed benefit.
The abdication of any product responsibility by providers.
The application of PIA rules on Fimbra members.
The application of retrospective regulation.
The wave of limitation legislation.
The presumption of guilt before innocence is proved.
The publicity campaign that encouraged claims regardless of merit.
The apparent volte-face by clients of their intent at point of sale.
The application of ABI rules by providers on PIA members for joint liability cases.
The waiving of causation by providers.
The techniques employed by the monitoring teams.
The level of fees claimed by actuaries and scheme trustees for basic information.
The level of fines which appear disproportionate to the fault.
However, the latest situation may prove to be the final straw for many IFAs.
In September 1998, the commercial division of the High Court ruled that a professional indemnity claim was valid, where notification had been made to the underwriter within the policy term of circumstances that may give rise to a claim instead of would, and that claim could include any costs incurred with third parties in effecting the pension review.
Most underwriters ignored the legal precedent.
Now several underwriters have voided policies on the basis of non-disclosure, misrepresentation and breach of warranty for failure to maintain a fact-find form as the proposal form for the risk required.
This did not only apply to claims for those client files that were at fault but to claims made for client files that had the correct documentation.
The result of this avoidance means that any IFA who is required to pay redress will find that their liability is not capped by their excess.
As the pension review draws to a close to the timetable set down by the regulator, IFAs are under ever-increasing pressure to make clients an offer or inform them that no redress is due.
Many IFAs intend to bring individual legal claims to recover liabilities that they believe their insurance cover would provide. However, the time has now come for all IFAs, whether affected or not, to support a collective High Court action.
The grim alternative will be that many honest and hard-working IFAs may close for ever and who then will look after the widow's mite?
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