A further third of advisers (30%) say it’s not available to them.
The research, released today from the NMG IFA Census, is part of the ongoing AIFA and Zurich backed ‘Fair Liability 4 Advice’ campaign, calling for the introduction of a long-stop for the advice profession.
The research also highlights adviser views on possible solutions for limiting liability:
• Nearly eight out of ten (78%) of advisers agree that less expensive professional indemnity run-off cover is the best option for the profession
• Almost six out of ten (58%) believe that converting your business to limited liability status to reduce exposure to future personal liability is the best option
• Seven in ten (70%) would consider an agreement with the Finanical Ombudsman Service whereby the clock is reset during a face-to-face review with the client (i.e. liability for earlier advice ends)
When asked how they currently deal with open ended liability 37% of advisers say they just live with it and accept they will take it to the grave. While a similar number (39%) of advisers use, or plan to use, professional indemnity insurance to cover them.
Richard Howells, Zurich's intermediary sales director, said: “It’s wrong that advisers have to accept they will take their liability with them to the grave. IFAs are doing an enormous amount of work to make sure they operate better businesses.
“They are providing a better service to their clients, a clearer explanation on costs and ultimately a higher value in the business. But if that value is being eroded because they cannot even calculate their liability then it leaves the market open for predatory buyers to drive down the value of IFA businesses.”
Chris Hannant, policy director at AIFA, said: “The level of consumer complaints about advisers continues to fall. The latest figures from the Ombudsman show the number of complaints against IFAs has fallen from 3,092 to 2,643 for the 2011/2012 financial year. IFAs now represent just 1% of all FOS complaints.
“It is extremely positive that complaints against advisers continue to fall and shows advisers are looking after their clients. The regulator needs to recognise this in its approach to the profession.
“Advisers have responded to the demands of the RDR and the FSA needs to deliver on its promise of a regulatory dividend for firms. Unlimited liability of advice and rising PI premiums, due to the retrospective actions of the FSA, are damaging the profession.
“It’s clear PI cover is rising in cost despite the positive actions of advisers. The regulator needs to act and deliver a fairer outcome for the advice profession.”
AIFA and Zurich are encouraging advisers to support its campaign for the introduction of a long stop on advisers’ liabilities.
The campaign also aims to research the impact on the ability of firms to attract long term investment; explore the options available for advisers and help them understand, limit and manage their long term liabilities.
In addition the campaign is seeking to address how advisers can mitigate against the risks and what steps parliament and regulators should take to support the profession.
