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Rockingham advice claims will not be covered by PI cover

Rockingham Retirement has revealed its advice arm has had no professional indemnity insurance in place since August 2010 and that its former insurer will not accept any claims against the firm.

PI cover is valid for when claims arise, not when the business is written, and so any claims against the firm since this date will not be covered by the insurer.

A letter from Rockingham managing director Steve Hunt to investors, seen by Money Marketing, states PI cover was withdrawn by its insurer Eureko on August 1, 2010 when its existing cover came to be renewed.

The withdrawal of cover followed an FSA visit to Rockingham in June 2010, which led to Rockingham suspending its advice arm.

In September Rockingham was fined £35,000 for unsuitable sales of unregulated collective investment schemes and sales of ARM bonds backed by life settlement policies.

In the letter Hunt says: “Rockingham was unable to negotiate ongoing terms as a result of the FSA request to suspend permissions despite no complaints being registered with Rockingham up until that date.

“The business did continue with PI cover for its direct offer annuity business but with no cover for previous advisory business being included.

“At the subsequent renewal the cover lapsed without any investors being eligible for cover and we have been subsequently advised after taking legal opinion that no claims will now be accepted by the insurer.”

Hunt goes on to say that Rockingham has “fought long and hard” to argue cover should be in place based on when the business was sold.

The letter adds: “This statement about PI is bound to upset but I can assure you all we have been fighting Eureko for over a year now but legal opinion is that there is nothing we can do about it and it just adds to the continuing list of injustices.”

The Financial Services Compensation Scheme has not declared Rockingham in default but says it is monitoring the company. Money Marketing understands the Financial Ombudsman Service has passed outstanding complaints about Rockingham to the FSCS.

Neither Rockingham nor the FSA have made a formal statement about whether the company is in liquidation.

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. It makes my stomach churn to hear Steve Hunt continually blaming others. It was Rockingham who misrepresented the risks of the products they sold, and the FSA who allowed them to get away with it even after they had been made aware of what was going on.

    Companies have to submit a Gabriel return every 6 months to the FSA. Rockingham have not held PI cover for 18 months, and yet were able to continue trading. Did they lie to the FSA, or did the FSA fail to pick up on this. If it is the former then criminal charges should be brought against Rockingham’s directors. If it is the latter then charges should be brought against Hetor Sants before he walks off in to the sunset with a bigger pay off than most of Rockingham’s victims earned during their lifetime.

  2. We will see many more tales of woe about this subject I am sure in the coming year.

    31/12/2012 – end of the world as we know it

  3. This makes the whole situation much worse. As if Rockingham had retained run off PI cover this would have reduced the level of claims that will find there way to the FSCS. Now all the claims will be handled by the FSCS increasing the levy on current registered firms.

  4. It has always struck me as rather odd that PI is insured on the basis of when a claim is received rather than when the risk was incurred.

    Compare this to employer’s liability for which the insurer remains liable (that is why policy documents must be retained for 40 years).

    Would it work for PI when the FSA can retrospectively change the rules so that nobody knew what they were insuring?

    Perhaps not but it would certainly reduce the FSCS levy.

  5. Gabriel return every 3 months not 6. Why was it not picked up? It an abomination that this should happen and there are some very, very serious questions to be asked. No PII policy document displayed on wall, no adviser picked it up or asked questions?
    This stinks.

  6. Is Hunt a crook? Let the court decide….

  7. What will happen when more firms can’t obtain PI, the IFA’s left pick up the FSCS bill in addition to paying their own ongoing PI insurance.
    Does this mean PI providers can withdraw cover at renewal and walk away from ALL future claims that may arrise leaving the remaining IFA’s to pick up their compensation costs via the FSCS?

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