The Financial Conduct Authority has sent out a ‘Dear CEO’ letter to insurance companies that provide or have provided professional indemnity (PI) cover for advice firms involved in the British Steel Pension Scheme (BSPS) saga.
The regulator is asking insurers to cooperate as swiftly as possible with advice companies, following the publication of the final rules for the British Steel redress scheme, which is expected to pay out around £49m ($59m, €57m) to more than 1,000 former members.
As part of the push to compensate victims, the FCA has prompted PI insurers to respond expeditiously to advice firms’ requests. More specifically, the regulator expects insurance providers to:
- Give an opinion on whether PI policies are likely to respond to claims about BSPS advice. The information should be readily available “given wider obligations to understand the cover you provide and so you would be able to provide this information without undue delay to support the assessment BSPS scheme firms need to undertake”;
- Say whether their PI policy is expected to provide cover for claims falling within the redress scheme;
- Provide a summary of reasons in the event the PI policy is expected to not respond to British Steel-related claims; and
- Draw the policyholder’s attention to any other relevant information in relation to the cover, including on the process of how to make a claim.
When receiving claims from BSPS advice firms, PI providers should consider these “promptly and fairly”, the FCA said, as well as swiftly communicate the outcome of such claims and handle them and their payment in a timely manner.
“This is to ensure that the scheme runs as smoothly as possible,” the regulator added. “It will support BSPS scheme firms so they have certainty over the cover that is available to them, and can help consumers receive the redress they are due.
“We also encourage insurers to develop or maintain approaches that facilitate and expedite the reporting and consideration of claims that may arise as a result of the redress scheme, with no unreasonable barriers, having regard to the requirement to handle claims promptly and fairly.
“If you use the services of insurance intermediaries or other third parties to provide claims handling services on your behalf, you should take the necessary steps to ensure they are aware of our expectations in this letter to enable you to comply with your obligations under our rules.”