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Are your charity clients covered to give professional advice?

Many charities are not only unaware that they give professional advice but that they could also be sued for providing that advice. Our charity expert Phil Duffy offers tips for brokers to help their charity clients avoid this legal minefield.

Ask your clients these four questions:

If they answer yes to any or all of these questions then they should consider purchasing professional indemnity insurance.

1. Does your organisation provide advice or support given by employees or volunteers who hold specialist knowledge or a particular skill set?

2. Do you consider that your organisation offers professional or expert advice or knowledge or information on a specific subject matter?

3. Does your organisation handle, hold or store customers information?

4. Does your organisation publicise services via a website?

According to recent research*, more than a third of the charities providing professional advice have no insurance to protect themselves in the event of being sued as a result of the advice they give. It’s an oversight that could see many in the sector suffer from expensive legal costs and damages, and even threaten the future viability of their charity.

The challenge for many is realising that not only do they give professional advice but that they could also have a claim brought against them for giving such advice proves to be misleading or incorrect.

  • Does the charity give professional advice?

     

    While some charities are wholly in the business of providing advice – the Citizens’ Advice Bureau for example or the Samaritans – it can be less clear cut for others. Many charities however will pass on some form of advice as part of their day-to-day work whether it’s a charity for cancer advising on medical treatment, or a charity for the homeless offering advice on where to get housing help.


    Providing professional advice can be as simple as offering a question and answer section on a website or providing recommendations on a leaflet for further information.

  • Can a charity be sued for giving incorrect advice?

     
    Yes. Although some charities believe that they cannot be sued for providing advice because they don’t charge, this is not the case. The law considers a charity working in a specific sector to have a better understanding than the people they are advising; if that advice proves to be misleading then they could be held accountable. Some potential litigants may even see charities as a “soft touch” and an easier organisation to bring an action against.
  • What steps can a charity take?

     

    To help reduce the chance of being sued, and to protect themselves if they are sued, charities need to ensure that they:


    Practise good risk management
    All employees and volunteers should be well trained, suitably qualified for their roles, and fully compliant with any relevant legislation. This level of professionalism starts from the top of the organisation and should permeate right through the charity. Any new employees or volunteers should not be in a position where they can give advice that could get the charity into difficulties.


    Consider professional indemnity insurance
    Professional indemnity insurance – once seen as the preserve of the paid professions such as accountancy or law – is now bought on a much wider basis by any profession that gives advice as part of their service.

Some charities mistakenly believe that they are protected under their existing public and employers’ liability for the sort of claim that can result from providing negligent advice. This is not the case. Professional indemnity would be needed to protect against these types of claims while it can also help cover other related risks such as those associated with holding or handling data.

If a charity holds personal information for clients as part of its service which is subsequently lost or hacked, that charity can be held accountable and a professional indemnity policy would help cover the exposure.

* Datamonitor Financial – UK Charity Insurance (published November 2014)

To find out more about Ecclesiastical’s professional indemnity insurance for charities speak to your contact at your nearest regional centre
Ecclesiastical Insurance Group plc (EIG) Reg No 1718196. Ecclesiastical Insurance Office plc (EIO) Reg No 24869. Ecclesiastical Life Ltd (ELL) Reg No 243111. Ecclesiastical Financial Advisory Services Ltd (EFAS) Reg No 2046087. Ecclesiastical Underwriting Management Ltd (EUML) Reg No 2368571. E.I.O. Trustees Ltd Reg No 941199. EdenTree Investment Management Ltd (EIM) Reg No 2519319. All companies are registered in England at Beaufort House, Brunswick Road, Gloucester GL1 1JZ. EIO and ELL are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Firm Reference Number 113848 (EIO) and 110318 (ELL). EFAS and EIM are authorised and regulated by the Financial Conduct Authority. Firm Reference Number 126123 (EFAS) and 527473 (EIM). EUML is an appointed representative of EIO who is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Firm Reference Number 402228.