When we first established AFS Compliance we adopted the slogan “We’ve got you covered”, the whole point being that under our umbrella our network members knew we had considered all the things a modern day broker needed to compete and grow a business in the commercial and asset finance sector. The package covers a multitude of different services which are explained on our broker in a box page, but I don’t want to go over all of them, I want to focus on 1: Professional Indemnity Insurance (PII).
In April 2019 the FCA increased the Financial Ombudsman’s previous £150,000 compensation award limit to £350,000. It also allowed the Ombudsman to consider complaints from SME’s meeting certain criteria. When the regulator first suggested that it was considering these changes in it’s consultation paper (CP18/31) it acknowledged that this would lead to increased PII costs for firms and we are now starting to see significant increases in premiums.
In some sectors the regulator does not require, but suggests firms have PII and I also know that some lenders don’t require brokers to have PII, but I cannot see why a broker would not cover themselves. I have heard brokers say that they’ve never had a claim, but I’ve never had a claim on my house insurance, but that doesn’t mean I would consider not having it ?
Whilst the rules have always been there, they have never been as proactively enforced. On a regular basis we hear about changes to the rules and new expectations from the regulator. The more rules there are, the more likely it is that something could be missed and a claim could be made. So any responsible broker should have cover to ensure they have the means to compensate a client should something as unlikely as it may be actually happen.
Premiums are going up, but AFS Compliance recognises the importance of having cover for our network members and their clients, should the unthinkable happen. This hopefully shows our commitment to providing the most comprehensive package for any commercial or asset finance broker and ensuring that “We’ve got you (and your clients) covered”.
Group Compliance Director