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PI firms warn IFAs over endowment clients

Professional indemnity insurers are warning IFAs not to proactively contact clients about endowment mortgage shortfalls amid concerns that they could fall foul of their PI cover.

However, IFAs claim the advice is short-sighted as it would be better to advise clients to take action now on potential shortfalls rather than wait until endowments mature, when a complaint is more likely. They also say PI insurers are preventing conscientious IFAs from doing their job.

IFAs have seen PI rates rocket and terms toughen at the same time as some life companies have revealed that as many as 80 per cent of endowments could face shortfalls.

Chubb Insurance Company assistant vice-president Jona-than Kennet says he is concerned that IFAs could be unintentionally admitting liability if they contacted clients or issued mailings on endowments.

PYV claims director Robert Bass says: “Insurers are not terribly happy with IFAs having a &#39kick me&#39 sign on them. There is no regulatory requirement for advisers to mail clients about shortfalls. IFAs can give advice when they see the clients to service investments.”

Kangley Financial Planning managing director and Aifa council member Geoff Kangley says: “I understand the PI insurers&#39 nervousness and advisers have to exercise extreme caution.”I want to write to clients to advise them to take action now to mitigate their position but the insurer is against this as it could incite complaints. The adviser is left in an invidious position.”


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The Council of Mortgage Lenders believes improvements to the housebuying process implemented in the last four years by lenders could render the Government&#39s proposals for sellers&#39 packs out of date.Its figures show that the average time taken to make a mortgage offer has been cut from 22 days in 1998 to 15 now.The CML&#39s research […]

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 […]

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 […]

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