Professional indemnity (PI) insurance will not be cheaper for restricted advisers, despite some companies "peddling" this message to the industry, according to Sense commercial director Steve Young.
Young said there were currently several restricted companies pushing the idea that attaining PI insurance will be more costly for independent than restricted firms.
The argument is based on the fact that, to remain independent post Retail Distribution Review (RDR), an adviser must be able to offer advice on a wider range of products, pushing up the costs of insurance.
But Young said he had spoken to "six or seven" PI brokers and insurers to try to determine whether it would be more expensive for Sense - as an independent firm - than its restricted counterparts.
He said: "Undoubtedly, one of the factors a PII insurer will consider is the nature of the business being written, but in reality for IFAs, 99% of sales won't involve the more esoteric or risky products.
"The insurer's risk assessment is actually made around the following criteria: the established relationship with the PII insurer; a commitment to sound risk management; sound compliance and file keeping and a decent claims record."
Young said that, in some cases, restricted advice may increase the cost of PII.
"There were actually some concerns that restricted advice could increase future claims if advisers sold unsuitable products because they did not have access to the whole market," he said.
"Similarly, some restricted firm may run a higher risk by promoting 'own label' funds and products, as this may increase the risk of systemic miss-selling."
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