Up to a third of IFAs firms could be thrown into crisis next week because their professional indemnity insurance premiums will quadruple.
PI insurers and brokers are warning many IFAs, around 30 per cent of whom have PI policies due for renweal on November 1, to expect premiums to rise by up to 300 per cent, while others may find themselves uninsurable.
The warning comes against the backdrop of worries over the total cost of phase 2 of the pensions misselling review and the impending review of FSAVC misselling as well as the new threat of an endowment review.
Industry experts predict up to 15 per cent of those facing renewal could find themselves unable to find cover. Others will find they cannot get complaint cover or will be forced to pay excesses of up to £10,000 per pensions review case. They say the small practices will take the brunt.
PYV managing director Ian Boscoe says: "IFAs are likely to face rocketing premiums of anything up to 300 per cent. Excesses will also be going up dramatically and quite a substantial number of IFAs will be declined cover altogether."
PI broker Alfred Blackmore Professional Risk director Mike Pummell says: "I foresee lots of problems over the coming weeks with many IFAs ending up with terms and conditions that are not PIA compliant."
PIA press officer Sarah Modlock says: "If an IFA firm rings us and suggests it is struggling we can help and we will treat them sympathetically."