More than eight out of ten financial advisers are concerned about the risk of negligence claims in retirement.
Eighty five per cent of respondents to the Association of Professional Financial Advisers’ (APFA) latest ‘Cost of Regulation’ survey said that the lack of a liability ‘longstop’ made them worry about their personal finances when planning retirement.
APFA is campaigning for a 15 year longstop for negligence claims against financial advisers. It says the Financial Conduct Authority’s (FCA) recent Financial Advice Market Review (FAMR) failed to properly consider the issue.
“The lack of a longstop is a clear concern for financial advisers who operate as sole traders or in partnerships as they potentially face unlimited liability long after they have ceased trading and into retirement,” said APFA director general Chris Hannant.
FAMR ruled out a 15 year longstop as it could limit protection for consumers who had bought long term investment products. Estimates from the Financial Ombudsman Service suggest that more than 200 retired financial advisers could face complaints every year.
“Right now financial advisers have unlimited liability for their advice, which means that there are risks of claims for negligence right through their retirement,” said James Burgoyne, Director – Claims & Technical, Brunel Professional Risks said: “The only effective way currently to mitigate this risk is by buying run-off professional indemnity insurance cover. We help our clients to source and buy high quality cover, which gives them peace of mind in their retirement years.”