Financial Advisers - Reducing the risk of Professional Indemnity claims

risk management in large text and associated words in small text If you are an IFA then you will have your own view of the huge changes the industry has gone through during the last 10 years.

Whilst the aim has been to improve choice and transparency for the customer, Financial Advisers and the entire industry has had to deal not only with regulatory change, but a significant increase in professional indemnity claims.

One of the ways a Financial Adviser can better protect themselves is by tightening risk and compliance procedures and adopting the practise of good record keeping.

Here are some more important and practical tips
  1. Make sure your client understands the product you are selling them
  2. Don't offer advice on products you do not specialise in, or fully understand
  3. Ensure the client signs off on the assessment of risk
  4. Wherever possible get clients to sign off / agree letters of advice
  5. Ask your client to obtain their files from their former adviser, if applicable
  6. Make sure everyone in the firm is clear on the notification requirements under your professional indemnity policy. A claim may not be covered if you fail to comply.
  7. Ensure complaint letters are dealt with promptly and courteously
  8. ALWAYS ensure your insurers are immediately informed of any possible claim throughout the insurance period

You may feel that some of these tips are rather obvious and basic, but you'd be surprised how often these basics are not observed by firms and the claims which then arise.

For more information or a discussion, please call us on 0345 251 4000.



This guidance note is intended for information purposes only. Whilst all care has been taken to ensure the accuracy of the guidance note it is not to be regarded as a substitute for specific advice. This guidance note shall not be reproduced in any form without our prior permission.  © 2018 Professional Indemnity Insurance Brokers Ltd