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A letter from Rockingham managing director Steve Hunt to investors, seen by Money Marketing, states PI cover was withdrawn by its insurer Eureko on August 1, 2010 when its existing cover came to be renewed.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