Professional indemnity insurance is compulsory for all mortgage brokers that provide advice on residential or consumer mortgages. If you provide purely corporate finance, it may not be compulsory, but we’d still recommend it.
In recent years, we have seen an increase in claims, in part driven by social media and campaigns by some law firms, often referred to as ‘claims farmers’. These campaigns, previously focused on large investment providers, are now targeting companies of any size.
The Financial Conduct Authority has prescribed minimum thresholds which you’ll need to meet. The current minimum for professional indemnity is £1,850,000.
Professional indemnity covers you for allegations of mistakes and negligence.
In financial services that is typically anything that is deemed to be a complaint under Financial Conduct Authority rules.
It will help you provide a formal response to any complaints and will also cover any compensation that the Financial Ombudsman Service (FOS), you or your insurers deem payable.
Typical claims include allegations of negligent advice (where applicable) or allegations of poor performance.
This can be complicated but insurers, and brokers, should be transparent about exclusions.
We will be able to advise but it’s worth knowing that some risks might be excluded, such as:
We can seek quotes for any UK mortgage brokers, regardless of specialism or size.
It is crucial that you understand your policy excess and how it can be applied in practice because excesses for mortgage brokers can be very high, with some starting at £5,000.
It can be complicated too but we can advise you.
Most excesses will apply to “each and every claimant”. If your excess, is £5,000 and it applies to each and every “claimant”, if you receive five simultaneous claims you may be facing a total policy excess of £25,000.
It’s important you check and audit your advisers and ensure no mistakes are being repeated.
