Hardening of PI market
Phil Billingham, director at O&M Pension Advice, said: “It is with great disappointment that we have been forced into this position. When I took over the business in January, we had plans to become directly regulated with the Financial Conduct Authority (FCA), and move onto chartered status as soon as possible”.
“Unfortunately, a hardening of the PI market in the wake of the British Steel fiasco, together with unexpected difficulties with our arranged PI insurance, has forced our hand. Sourcing commercially acceptable PI cover at short notice has proved impossible,” Billingham said.
IA understands that firms offering pension transfer advice are being refused PI insurance by providers if they do more than 10 a year, on average.
Firms can also expect to pay a lot more when they are able to secure coverage.
Billingham said with the help of its outsourced compliance support firm CATS, the company will now enter a period of orderly rundown.
“Whilst this will be difficult for everyone, especially our fabulous staff, we will be working hard to ensure that we give the best advice we can to as many of the clients we have been introduced to as possible.
“To that end, we will cease to accept new cases as of [2 May],” Bilingham said.
He said the two parent firms of O&M Pension Advice, being O&M Pension Solutions and Perceptive Planning, are not affected by the closure.
Jason Wykes, who ran the firm until January, said it was a “particularly galling situation”, as O&M Pension Advice had never had an advice complaint since it formed in 2014.
“In addition, we had a full review of our service, advice and processes by the FCA in 2017 resulting in only minor process changes,” Wykes said.
Jamie Newell, director of PI insurance broker O3 Insurance Solutions, said: “It’s a real shame, almost the perfect storm. It’s just very unfortunate that with the current spotlight on DB transfers by both the FCA and PI insurers that obtaining commercially acceptable PI Insurance has proved fruitless,” Newell said.
PI paper work increases
The chief executive of Aisa Financail Planning, James Pearcy-Caldwell, told International Adviser that his firms has experienced an increase in “acute diligence” as a result of DB transfers, with some PII firms making it clear that they no longer will cover this business.
“Aisa has had to document all DB transfers with their reasons dating back to 2006, leading to an increase in administrative workload, with further specific follow-up questions.”
“Further, questions have been added to the PI annual questionnaire with follow up due diligence taking what was a 10-page form to around 20 pages, with further interactive questions and answers leading to additional administrative burden,” Pearcy-Caldwell said.