Will court ruling lead to Professional Indemnity Insurance premium rise for IFAs
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A ruling by the Court of Appeal has removed the right of fund trustees to apply the ‘Hastings Bass’ rule. Under this provision, trustees who made a ‘bad’ (i.e. tax inefficient) decision in the course of managing the trust could elect to have that decision reversed. An option that has been described as a “legal morning-after pill”.
But now, provided the trustees have taken financial advice, they can no longer ‘undo’ their decisions. According to a report on ftadviser.com, that could leave the advisers open to being sued by trustees acting on behalf of trust beneficiaries. And if the Court’s ruling does result in more legal actions being taken against advisers, some commentators believe that will leave advisers facing higher professional indemnity insurance premiums.