Arch cru redress scheme could have Professional Indemnity Insurance implications
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Under a scheme proposed by the FSA, IFAs who advised clients to invest in Arch cru funds will be required to take the initiative by reviewing every case and, where appropriate, paying compensation even if there has been no complaint. According to an article posted on moneymarketing.co.uk, this has prompted the Association of Independent Financial Advisers (AIFA) to warn of serious consequences for the professional indemnity insurance market.
The concern is that professional indemnity insurance providers will seek to increase premiums, or even withdraw from the market altogether, in anticipation of the FSA forcing similar reviews in the future and effectively compelling IFAs to make compensation payments. Indeed, as reported on moneymarketing.co.uk, several industry figures have already pointed to precisely this possibility already occurring within the professional indemnity insurance market.