Compensation claims arising from computer difficulties would no longer be covered by an adviser's pr...
Compensation claims arising from computer difficulties would no longer be covered by an adviser's professional indemnity insurance (PII) policy under FSA proposals.
This would be the result of new indemnity insurance exclusions outlined in the regulator's Consultation Paper 169.
There is no mention of issues arising from computer failure in the existing financial adviser indemnity insurance exclusions. The FSA claims it is being added to bring the regulator's standard provisions up to date and in line with general indemnity insurance market practice on computer network and data corruption.
The FSA paper states that PII will no longer cover claims arising, directly or indirectly, from corruption, erasure, theft or alteration of electronically held data on the adviser's systems. This damage can either be caused by a computer virus or any person who is not a partner, director or employee of the assured adviser.
In these circumstances, employee can mean anyone used in connection with the adviser's professional business on a self-employed or contract-hire basis.
Depending on interpretation, these further exclusions could leave advisers exposed to claims if a client loses out financially through a technical delay with online business, for example.
The majority of financial websites incorporate detailed audit trails that should ensure such problems do not come to fruition, according to Standard Life, which carries out around 5% of its intermediary business online.
On the mutual's website, for example, the audit trail shows if a deal has failed to go through for any reason and a note of confirmation appears on screen when the transaction is successfully completed.
£116.8m of benefits received by customers
Spent 13 years at JPMAM
Headed by Ben Palmer and Edward Park
Consults on regulation and innovation in green finance
13 studies begun since April 2013