Professional indemnity insurance specialists have warned IFAs to speak to their PI brokers before sending block notifications to their insurers.
Block notifications involve advisers sending a list of clients who may be affected by particular circumstances to their insurer before complaints arise.
Law firm Regulatory Legal partner Gareth Fatchett, who is offering a block notification service to IFAs, says where situations arise, such as the collapse of Lehman, advisers are obliged to notify their insurer of any clients they have in Lehman-backed structured products.
Fatchett says: “This is not discretionary, IFAs must block-notify their insurer of any circumstance that may lead to complaints, otherwise claims that arise will not be covered by their insurance.”
But Collegiate underwriting director Richard Turnbull says he has seen a marked increase in claim management and legal firms contacting IFAs about block notifications in the past few weeks and warns IFAs should not contact their insurer before speaking to their PI broker. He says:
Rather than pay a lawyer for advice over block notifications, take advice from an insurance professional. If you don’t, you could jeopardise your cover.”
PYV chief executive Neil Pointon says: “IFAs should first speak to their broker about any problems so they do not jeopardise their policy or renewal at a later date.”