FPA to decide on PI solution

TheFinancialPlanning Association(FPA) is preparing to sign off on its own solution to provide professional indemnity (PI) insurance cover to its members.

The association will decide on the specific strategy for the solution at a meeting to be held on November 27.

The FPA’s PI cover task force has come up with three proposals with the third, seeking cover through offshore underwriters, looking the least likely to be selected to go to the FPA board for approval at its December meeting.

The two other proposals, which are more favoured, involve the FPA taking out a master policy or establishing an indemnity fund.

FPA head of professional standards June Smith says the master policy will mean the organisation holds the PI policy and members are signed up as participants.

“The minimums for joining the master policy are being discussed at the moment and it will probably exclude areas such as fraud or theft,” she says.

“Members would probably have to take out a policy to cover these areas.”

The second option is to set up the indemnity fund, which would cover members.

“We would hope to establish this without members having to hold their own PI cover, although fraud and theft would be excluded again,” she says.

The indemnity fund would also involve dealing with a reinsurer.

Smith says as many members’ PI cover runs out on December 31 or March 31, the FPA would set up an interim scheme.

“We expect whichever proposal is selected will take time to set up and this would not be in time for many members’ cover renewal,” she says.

“So there will be an interim arrangement for those members.”