What is Approved Persons Insurance?
During our work with clients looking to obtain full FCA authorisation for Consumer Credit, we were asked by several clients if there was an insurance policy that would cover them should they be investigated by the FCA following their authorisation. Many had tried to get Directors and Officers insurance, but were unable to get that insurance as they were a consumer credit business.
We have worked for several years with NDI Insurance and approached them to see if it would be possible to develop a policy to work like a Directors and Officers policy and add cover for Approved Persons.
We are pleased to confirm that we have now developed an insurance policy for any FCA authorised consumer credit business with Directors, Officers and Approved Persons cover. The policy has been developed to help with two potential issues you could face:
- Normal legal issues a business faces, for example a claim for breach of health and safety issues or unfair dismissal; and
- The additional complexity of facing an investigation by the Financial Conduct Authority into your business.
Specifically the policy will cover the Directors and Officers of a business for claims (legal costs and certain expenses incurred) where you defend any claim for wrongful acts. This may provide insurance cover for claims of
- Neglect, error or omission;
- Libel, slander or mis-statement;
- Actual or alleged breach of trust;
- Breach of duty;
- Breach of warranty of authority; and
- Wrongful trading.
As a Consumer Credit Business operating under the regulation of the Financial Conduct Authority there is an additional level of company management called Approved Persons. Our unique policy will cover the costs of any investigation that the Financial Conduct Authority may make into your business once you are fully authorised to trade by them.
We have recently been involved with two cases where businesses have had investigations into their business practises by the FCA. In one case the external costs of defending the investigation exceeded £35,000 which would have been covered by the policy, while the other the client decided to defend the action themselves as they could not afford the costs of using external experts. Again suitably qualified experts would have been paid by the insurance policy cover and may have enabled the client to have completed the investigation more favourably and expeditiously.