Independent financial advisers carry a disclosure burden at PI renewal that goes well beyond the FCA's minimum cover rule. The cover floor itself comes from IPRU-INV 13.1.4R, which sets the minimum limits and excess parameters for personal investment firms. That rule tells an IFA what cover to hold; it does not tell the firm what to say to the insurer when arranging that cover. The disclosure duty sits in a different statute — the Insurance Act 2015, section 3 — and it operates on top of the regulatory minimum, not instead of it.
For IFAs, the practical effect is that almost everything an insurer would want to know about the firm's regulatory history, suitability work and FOS exposure is potentially a material circumstance. Getting that disclosure right is the single largest factor in whether a renewal proceeds on the terms first quoted, gets re-rated mid-process, or leaves the firm with a claim later treated as a qualifying breach.
Section 3 requires disclosure of every material circumstance the insured knows or ought to know, or sufficient information to put a prudent insurer on enquiry. For an IFA firm in 2026 the list typically includes:
Section 3(5) requires the insured to make a reasonable search of information available within the organisation. For an IFA firm that means asking each adviser — not only the principals — about open complaints, past advice that has been queried, and any case the firm has settled informally. The compliance officer's records, the file review log and the FOS portal all sit inside that search. So does any correspondence from the FCA's supervision team.
The FCA's published work on the DB transfer market — past business reviews, permission removals across the IFA sector, and the consumer redress scheme for unsuitable BSPS advice — forms part of the background a prudent insurer would expect the firm to acknowledge. Sector-level context is not itself disclosable, but the firm's position within that context is.
The following is a hypothetical scenario constructed to illustrate the principles. It is not based on a specific firm or case.
A small IFA firm has 12 advisers and is approaching PI renewal. Between 2017 and 2018, three of its advisers made BSPS transfer recommendations. Three of those cases are now under review at the Financial Ombudsman Service. No final decisions have been issued; the firm is contesting each complaint.
Under section 3, the firm must disclose both the open FOS complaints and the underlying BSPS advice exposure — the volume of BSPS transfers recommended, the broad outcome for those clients, and the firm's reasoning. The absence of a final FOS decision does not delay the disclosure obligation; the circumstances are material now.
If the firm discloses only the count of "open complaints" without identifying them as DB transfer matters arising from BSPS recommendations, that omission would likely meet the section 8 test for a qualifying breach. Insurer pricing for IFAs in 2026 is heavily influenced by DB-transfer exposure; an insurer priced without sight of the BSPS context would have written the risk on different terms had it known.
Begin the disclosure exercise well before the renewal date. Document the reasonable search — who was asked, what was reviewed, what was returned. Where the firm is uncertain whether a circumstance is material, the safer course is to disclose and let the insurer assess. Wider context on PI renewal for related professions sits in the IFA PI guide, the accountants PI guide and the management consultants PI guide.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.