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Insurers may choke on this PI

There is no better evidence for just how deep the PI crisis has become than when IFAs are warned not to get in touch with those most in need of their advice.

It has emerged that PI insurers are telling IFAs not to write to clients they fear face an endowment shortfall in case it leads to a claim, although they can advise those who get in touch with them.

There are echoes of the pension review but in many ways this is much worse because, under the pension review, doing nothing was an option until the review had wound its course.

If an endowment is going to leave a shortfall on a mortgage, doing nothing is not an option. In most cases, the adviser should step in.

IFAs argue that if someone is going to make a claim they will make a claim eventually whether they get a warning of a shortfall from their adviser or their provider or when they come to pay off the mortgage. The last case is surely the worst, so why put a ban on IFAs writing to their clients simply to postpone the complaint?

It is also likely that a timely intervention from the adviser will mean that the client is less likely to complain because the IFA has provided the benefits that going to an IFA should.

At the very least, it is much more likely to prevent vexatious claims.

In these cases, we must always emphasise that PI insurers have cause to be concerned, given the regulatory environment that IFAs are forced to operate in. But in this case, they may be increasing the risk of more claims whether valid or vexatious at the same time as undermining the whole reason for going to an IFA.


Derbyshire Building Society – Derbyshire Dual Bond

Tuesday, 17 September, 2002 Type: Combined high interest account and Norwich Union portfolio bond HIGH INTEREST ACCOUNT Minimum-maximum investment: £3,000-£150,000 Interest rates: 7% gross a year Term: One year Offer period: Until further notice Withdrawal penalties: No withdrawals permitted during term UNIT-LINKED BOND Aim: Income or growth Minimum investment: Lump sum £7,000 Fund links: Norwich […]

Threadneedle sets up defensive Fofs

Threadneedle is offering two defensive funds of funds in a move which will see the firm&#39s existing managed funds renamed to reflect their higher risk.The defensive equity & bond fund will invest 25 per cent in equities and 75 per cent in bonds while the defensive bond fund will invest entirely in fixed interest.Both funds […]

FSA bond probe pointing at IFAs

The FSA is asking life companies to volunteer information about past sales of structured products because it fears a “fallout” when the indexlinked bonds mature.It has sent a letter asking insurers to help it prepare for problems that may arise from policies maturing this year and reassuring them that any direct impact could be minimal […]

Move to cities makes it tough for first-timers

People moving to cities in the UK are finding it increasingly difficult to get on to the first rung of the housing market ladder, according to the Economic and Social Research Council.The research found that the combined effect of the rapid growth in homeownership over the last 20 years and more people moving to urban […]


Out from the long grass? An IT and NI merger

Those with a long memory will recall that at the start of the last parliamentary term George Osborne announced his intention to merge income tax (IT) and national insurance (NI).  Headline grabbing as the initiative was, the reality of the complexities, challenges and costs of such a move resulted in this idea being kicked into the political long grass.


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