Professional Indemnity Insurance Proposal Form For Financial Advisors

Transcription

1 Professional Indemnity Insurance Proposal Form For Financial Advisors

2 SECTION 1 BUSINESS DETAILS 1.1 a. Name of company/companies to be covered: Establishment date(s): Date first directly authorised: b. Name of predecessor companies for whom cover is required: Establishment date(s): Date directly authorised: Cessation date(s): c. During the past 10 years has the company s name been changed, has any other business been purchased and/or has any merger or consolidation taken place? If please provide details and confirm that no responsibility for past liabilities has been accepted? Please provide full details and give a brief overview of the due diligence conducted: d. Please confirm if the company has ever been an Appointed Representative of another firm? If cover is required for this period please provide full details, including the dates for the period that you were an Appointed Representative and confirmation that files have been retained for all advice given whilst an Appointed Representative: 1.2 Were the activities of all predecessors and Appointed Representatives essentially the same as the company s present activities as disclosed in the form? If, please provide details by attachment. 1

3 1.3 Main address of the proposer (specifying the name and position of the individual responsible at this address): Address: Name: Position: Telephone: Address: Website: Other office Locations: 1.4 Please provide the following details for all Partners, Directors, and Principals: Name: Qualification: Date qualified: No of years experience: Please attach a CV if you have been established for less than five years and/or where any individual does not have any relevant qualifications. 1.5 Please provide the number of permanent staff, including Partners, Directors, and Principals: a. Registered individuals giving advice (including selfemployed advisers) b. Mortgage or protection advisers c. Paraplanners and other technical staff Working at the main address: Working at the other locations: d. Dedicated compliance staff e. Administrative and secretarial staff Total 2

4 1.6 a. Please provide the following details in respect of any current and past Appointed Representatives of the company/companies for whom cover is required. Continue by attachment if necessary. Trading Name: Date of Appointment: Date of Termination: Location: Income in last financial year: b. If any company has ceased to be an Appointed Representative please confirm that files have been retained for the period they were an Appointed Representative. c. Please provide a brief overview of the reason for their departure: 1.7 a. Please confirm that the method of control over your Appointed Representatives activities complies with your Regulator s guidance: If, please provide details by attachment. b. Please provide an overview of controls and compliance procedures for any Appointed Representatives or Registered Individuals not working from the main office: 1.8 Please confirm that all your advisers in 1.5a and 1.5b, and any Appointed Representatives detailed in 1.6 have RDR compliant qualifications and hold a Statement of Professional Standing? 1.9 Is the company connected or associated (financially or otherwise) with any other entity? If please provide full details including nature of the work undertaken for such other entity and income derived Does the company anticipate any major changes in its activities during the next 12 months? If, please provide details 3

5 SECTION 2 BUSINESS PROFILE 2.1 For the current, last and previous 4 financial years (where applicable), please state the total gross income derived: Current Year Estimate Last completed Year Previous Year 1 Previous Year 2 Previous Year 3 Previous Year 4 Year Ending: / / / / / / / / / / / / Trail Commission: Fees: Total: 2.2 In respect of the Retail Distribution Review (RDR) Adviser Charging requirements, please confirm the following: a. Charges are disclosed to clients up front, using a price list or tariff (confirming the specific amount to be paid later on): b. On-going charges are only levied where an on-going service (such as a performance review of their investments) has been agreed in writing with the client, detailing the service provided, any associated charges and how the client can cancel the service (this does not apply for charges on regular contribution products): 2.3 a. Please confirm that the company has reviewed the rules on payment of trail commission on pre-rdr assets and the FSA/FCA guidance on the treatment of legacy assets. b. Please confirm if the company has decided to continue to receive trail commission on pre- RDR assets? 2.4 Is the company offering: Independent advice (unbiased and unrestricted advice based on a comprehensive and fair analysis of the relevant market) Or Restricted advice (e.g. advice on a limited range of products or providers) 2.5 a. Please confirm that the company discloses to each client up front what type of advice they will receive (independent or restricted)? b. Please confirm the Service and Costs Disclosure Document (SCDD) and the Combined Initial Disclosure Document (CIDD) issued by the company have been reviewed in line with FCA guidance to ensure that they satisfy the new written disclosure requirements? 2.6 Is any income derived from clients outside of the UK? If please provide details 4

6 2.7 Please advise if the company has any special client focus such as Professionals (eg dentists, doctor or solicitors) or individuals with a high media profile? If please provide details 5

7 2.8 For the last 6 years please indicate if you have undertaken work in the listed categories and state the percentage of income derived, ensuring that the Grand Total boxes add up to 100%: Last 6 Years Last Year Pensions Sales & Advice - Private (including GPP) / % Pension Sales & Advice - Corporate / % Pension Funds Trustee Services / % Pension Fund Management Services / % Self Invested Personal Pensions (SIPPs) / % SIPPs Administration / % PENSIONS TOTAL: - % Private Client Portfolio Management/Fund Management discretionary / % Private Client Portfolio Management/Fund Management non-discretionary / % Unit Trusts/ISA s / % Insurance/Investment Bonds / % Taxation/Inheritance Tax Planning / % Esoteric Investments as defined in 2.9. below / % Other / % INVESTMENTS TOTAL: - % Mortgages (Prime/Residential) / % Mortgages (Sub Prime) / % Mortgages (Self Certification) / % Mortgages (Buy to Let/Commercial) / % Equity Release/Home Reversions/Lifetime Mortgages/Sale & Rent Back / % MORTGAGES TOTAL: - % Life and Protection / % PHI Medical / % LIFE & MEDICAL TOTAL: - Commercial Insurance / % Personal Lines / % GENERAL INSURANCE TOTAL: - Other (please specify) / % GRAND TOTAL: - 100% 2.9 a. Has the company ever provided advice or services with regards to direct investments or investments that have funds invested in any of the following: ESOTERIC INVESTMENTS: % of last year s income Structured Products, Deposits or SCARPs: / % Unregulated Collective Investment Schemes (UCIS): / % Any investment for Tax Structuring, Planning or Mitigation (other than ISAs): / % Products utilising Business Property tax allowances (including AIM listed investments) / % Traded Life Policies/Viaticals/Life Settlement Products: / % Traded Endowment Plans: / % Funds with a Concentration of Commercial Property Investments in excess of 25%: / % QROPs/QNUPs: / % Offshore Bonds: / % Film Finance Schemes: / % Hedge Funds: / % Exchange Traded Funds and/or synthetic Exchange Traded Funds / % Overseas Property Investments / % Bridging Finance / % Own Branded Collective Investment Funds: / % Any other unregulated products other than those above or unregulated advice / % 6

8 The total percentage income declared in Q. 2.8 for Esoteric work should match this total. SEE TE OVERLEAF. Total % If you have ever carried out work in any of the areas in Q. 2.9 please provide full past and present details on Appendix 1. b. Has the HMRC indicated that they intend to challenge the tax status of any of the above products arranged on behalf of any of the above? SECTION 3 PENSION ACTIVITIES 3.1 Please provide the number of: Number of transfers: Average value: Largest value: Pension transfers from Defined Benefit Occupation or Final Salary schemes arranged in the past 10 years: Pension switches from one product provider to another since 6 th April 2006: Pension switches from a personal and/or company pension to a Self Invested Pension Plan (SIPP) 3.2 Please confirm that you have reviewed a sample of your pension switching files against the four areas of suitability identified by the FSA as required in 2009? 3.3 Please confirm that in respect of any recommendation to switch from one Pension provider to another the four areas of suitability are reviewed and incorporated in all Suitability Letters: Please complete the following tables based on your most recent review: Date of Review: Number of files reviewed: Suitability Category: Pass % Fail % Extra products costs incurred: Benefits lost from ceding pension (including, but not limited to, Guaranteed Annuity Rates): New pension does not meet attitude to risk: Need for on-going advice not explained, offered or provided: If any files failed the review please confirm what remedial action was been taken, if any redress was offered, and if the sample was broadened accordingly: 7

9 3.4 a. Where the Company has recommended a switch to a SIPP, please confirm that advice has also been provided in respect of the suitability of the investments to be held within the SIPP? If please confirm that it is detailed in writing to the client that the scope of the advice is limited to the recommendation to transfer from a personal pension to a SIPP and not the subsequent investment of the funds? b. Where the Company has recommended a switch to SIPP, please confirm if the services of any third-party pension transfer specialists have been utilised to assess suitability and associated costs? If please provide an overview of how the liability for advice is allocated between the third-party specialist and the Company, and a copy of the transfer report provided to the client. c. Please advise if the Company has ever provided advice in relation to SIPP funds being invested into an Unregulated Collective Investment Scheme (UCIS), or overseas property or overseas property investment of any nature? If please complete Appendix 1 as appropriate in respect of any UCIS investments and provide full details of the overseas property investments and a copy of the suitability letters by attachment. 3.5 In the past 10 years has the company ever transacted or given advice in respect of income drawdown? If : a. How many advisers are currently involved in transacting income drawdown business and/or providing Annuity purchase advice? b. Please confirm they hold the appropriate qualifications and experience for these areas of advice? c. Please indicate approximate number of: Last financial year: Previous financial year: Previous financial year: Income drawdown cases transacted: Annuity purchase cases transacted (excluding phased retirement cases): d. Has the Reason Why Letter always drawn to the client s attention the adverse effects such a withdrawal will have on future pension benefits and established in each case why the client needed the cash and why other methods of raising finance were less suitable? e. Has any business ever been transacted where the client has given up a Guaranteed Annuity Rate? If please provide details of the advice. 8

10 3.6 Has the company ever recommended drawdown on a fund value below 250,000? If please provide a brief analysis of the Company s strategy and philosophy for the sale of income drawdown or phased retirement products in terms of fund values (e.g. why might you recommend drawdown on a fund value below 250,000), drawdown amount taken and commissions taken: SECTION 4 INVESTMENT ACTIVITIES 4.1 Please indicate the number of single premium or annual investments made in the last completed financial year where the sum invested was (please do not include monthly investments): a. Less than 25,000: b. Equal to or more than 25,000 but less than 150,000: c. Equal to or more than 150,000: 4.2 For the last complete financial year, please state the number of: a. Policy replacement recommendations made to discontinue premiums or surrender existing contracts and replace with similar contracts: b. Policies cancelled within cooling off period: Number 4.3 a. Please advise what restrictions/limits you impose on investments in your clients investment portfolio to restrict/limit the concentration of investments into a single product/product type or asset class? 9

11 4.4 Has the company ever provided any advice or services to any clients in respect of ANY investments where either the counterparty, product provider, bank, any other financial institution or fund/investment is insolvent, has a known liquidity problem, currently has redemptions suspended, is or was subject to asset re-evaluation or has otherwise failed and/or is under investigation in the public domain by any regulatory authority? If please provide details in Appendix In terms of investment recommendations made, please provide the current top 3 investment funds or product providers: Investment Fund Total Client Funds Invested Number of Investments 4.6 Has the company ever applied for, obtained, or previously held a Passport under IMD rules? 4.7 Please confirm that you have not provided any advice to any client that results in the client borrowing money, including taking out a mortgage, for the specific or eventual purpose of investing into another investment product? 4.8 Please confirm that if a client requires an investment bond to be surrendered in excess of the 5% cumulative allowance: a. The recommendation is always a full surrender of the whole bond or clusters (rather than a partial surrender of the bond) b. The product provider documentation for such surrender is checked by the compliance officer to ensure it is completed correctly c. The calculations are verified with the client s accountant (or third party professional) to ensure the surrender will not give rise to a chargeable event If, to a. to c. above, then please confirm that the client is made aware in writing prior to the surrender of the tax implications of the surrender, and signed agreement to proceed is obtained from the client. 4.9 Has the Company ever placed investments for a client on a non-advised, execution-only or simplified advice model basis? If, please provide details by attachment, including the investment products involved, the profile of the target market for such advice, the written confirmation provided to the client of the basis of such investments, and an overview of the risk analysis, business strategy, training and compliance provisions, and the distribution models adopted for the simplified advice approach. 10

12 SECTION 5 MORTGAGE ACTIVITIES 5.1 Please provide an estimate of the total number of transactions carried out in the last 10 years in connection with: Transaction Residential mortgages Sub-prime mortgages Self-certification mortgages Buy to Let mortgages Commercial mortgages (excluding Buy to Let) Equity Release/Home Reversion/Lifetime Mortgages/Sale and Rent Back 5.2 In respect of Equity Release advice: a. Are all providers of the schemes referred to above members of the Equity Release Council (formerly Safe Home Income Plans Ltd)? b. Were all other means of raising the capital/income required by the client investigated prior to making the recommendation to release capital from their property? c. Was the client advised to obtain independent legal advice in relation to the plan/transaction? SECTION 6 REGULATION/COMPLIANCE/RISK MANGEMENT 6.1 Is your compliance managed in-house or outsourced? In-house Outsourced If in-house please provide qualifications, experience and commentary on any external sources utilised to adhere to the FCA requirements and guidelines: If outsourced please provide details below: Name of compliance firm: Date of Appointment: How often do they visit your offices? Proportion of files checked by firm: % 11

13 6.2 a. Please advise whether you have received or are on notice of a visit from the FCA If please advise: i. Date of visit and confirm that any recommendations have been implemented ii. Anticipated date of visit b. Please advise whether you have ever received an intervention notice from the FCA or prior regulator or any warning relating to rule breaches? If please provide details: 6.3 Are you authorised to receive, hold or control client monies? If do you keep client monies in properly designated client accounts, completely separate from the company s own monies? 6.4 Are you able to confirm that all client paper records or electronic data are retained indefinitely? If please explain how you would protect your position in the event of a potential claim? 6.5 Have you sustained any loss through the dishonesty or fraud of an employee or appointed representative? If please provide details. 6.6 Has any insurer ever cancelled or refused to renew your Professional Indemnity Insurance? If please provide details 12

14 SECTION 7 CLAIMS INFORMATION 7.1 After full enquiry has any claim or potential claim been made against the business, or any principal, partner, or director or employee within the last ten years? If please provide details by attachment, including a summary and details of the allegation, dates, paid amounts, and if the matter remains outstanding, reserves and the maximum potential loss. 7.2 After enquiry are you aware of any circumstance which has or could result in a claim being made against the company, or any principal, partner, director or employee of the business? If please provide details by attachment, including a summary and details of the allegation, dates and the amounts involved. 7.3 What remedial action has taken place to ensure notified matters, whether settled or not, do not occur again or the likelihood of a recurrence is reduced? 7.4 Please confirm all matters referred to in questions 7.1 and 7.2 have been notified (separately to this proposal form) and accepted by previous or current insurers? SECTION 8 INSURANCE COVERAGE (Please complete if not currently insured via Lockton) 8.1 Do you currently have Professional Indemnity Insurance in force? If please provide the following details (please leave blank if currently insured via Lockton) a. Insurer b. Limit c. Excess d. Renewal date e. Number of years cover has been continuously in force f. Expiring premium 8.2 Do you currently have an office policy in force? If please provide the renewal date: / / 13

15 DECLARATION I/We declare that the statements and particulars in this proposal are true and that I/We have not mis -stated or suppressed any material facts. I/We agree that this proposal, together with any other information supplied by me/us shall form the basis of any Contract of Insurance effected thereon. I/We undertake to inform insurers of any material alteration to these facts occurring before completion of the Contract of Insurance. Returning this proposal does not bind the Proposer or Underwriter to complete this insurance but does authorise Apex Insurance Brokers Ltd to seek terms on my/our behalf from Insurers including current Insurer's if any. Signed: Date:

16 APPENDIX 1 1. ESOTERIC INVESTMENT EXPOSURE: As indicated in Question 2.9 please complete the following table in respect of these investments, or attach your own table ensuring all the information fields detailed below are included: Name of investor Date of investment Value of client s investment portfolio at time of investment Original investment value Product Current value Date of valuation 15

17 2. UCIS INVESTMENTS: a. Have you indicated in the table above that you have promoted or advised on or recommended any unregulated collective investment schemes (UCIS)? If please confirm: b. the relevant exemption/s have been identified and verified, and all conditions of the relevant exemption/s complied with in full (Articles 21,23,23A of the PCIS order and/or COBS 4.12)? c. you have reviewed The Perimeter Guidance Manual (PERG) Chapter 8.20 (Additional restriction on the promotion of collective investment schemes)? d. you are able to demonstrate adequate procedures are in place that document the exemption/s which have been relied on when promoting a UCIS, and the reasons why the exemption/s apply? e. all suitability obligations (including but not limited to COBS 9) have been adhered to in respect of the investment recommendation? f. access (or lack of access) to the Financial Ombudsman Service (FOS) or the Financial Services Compensation Scheme (FSCS) has been documented in writing to the investor as applicable? g. That due diligence has been conducted on each UCIS that has been promoted and is sufficiently documented. Please provide a copy of the due diligence for each UCIS that is detailed in the table above? 3. IHT/TAX MITIGATION/BPR INVESTMENTS: b. Have you indicated in the table above that you have advised on or recommended any investment into any product that invests into unquoted companies that qualify under the rules relating to Business Property Relief (BPR)? IF please provide a copy of the suitability letter, including any product literature referred to within the suitability letter. 16

18 APPENDIX 2 DOWNGRADED/INSOLVENT OR SUSPENDED INVESTMENT EXPOSURE: Please complete the following table if you have been directed to do in Question 4.4: Name of investor Date of investment Value of client s investment portfolio at time of investment Original investment value Product Current value Date of valuation 17