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Fee protection - to offer or not?

I know this is a regular question that is raised. It is certainly one that I have a perenial problem with.

I have been in practice now for 6 years and to date I have gone down the route of not offering fee protection to clients. I have had minimal enquiries over this period and I have largely absorbed the work/costs arising. I am not sure whether I have just been lucky so far with the number of enquiries to date.

I have never been a fan of this type of insurance but it does get raised occasionally by clients so I see it as my duty to keep it under review. I also get bombarded with offers from firms promoting the protection.

I wonder how many other accountants in practice there are like me with this ongoing dilemma of whether to offer it or not. It would also be interesting to learn from those that do offer it, how many wish they could now cease to offer it?

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No Brainer

Just offer it every client and let them make their mind up without any hard sell. Be sure to add a percentage so you make a bit of a profit.

We dont get many enquiries either, but when we do we charge proper rates as its no skin off the clients nose. NB - I also get more from people who chose not to take it up on the basis that is was their choice.

Its a no-brainer as far as I can see.

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I think you should

We have offered this for quite a few years. About 2 years ago changed provider to a block policy and we have a high take up from our clients, they in the main pay monthly. We use PFP and it works well. 

It does earn the firm good money and is worthwhile, but most important issue is clients are covered in the event of an enquiry

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Do not do it

Over 50% of your clients will already have cover and probably not even realise it.

 

Do they belong to F.S.B. if yes then covered. a lot of trade subcriptions include fee protection insurance as do many business insurance policies.

 

Get them to check - see it all the time that accountants sell policy to a client when they are already covered elsewhere

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Did it two years ago

Set it up with tax wise 2 years ago.  98% of clients took it and as mentioned there was no hard sell and tax wise were very reasonably priced. i think i made £200 - £300 to cover the admin time of it all.

It means as mentioned above you will not need to absorb it, but can bill at full rates.

I had one client who was already covered by a retail scheme but that was it.

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Go for it

We took it on quite a few years ago. Originally offered it and had about 70% take up - but the admin was a real hassle. So after two years we just told everyone they were having it. Hardly a squeak.

It's now a really useful profit centre for us and clients really value it.

Make sure the policy covers aspect enquiries and check for any excess.

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FSB does not cover everything?

I am not sure but my comprehensive policy with CCH now covers PAYE and VAT compliance visits which I don't think are covered by the FSB policy. This makes the accountants offering more comprehensive and so much more valuable to clients.

Most of my clients pay for it ( a few choose not to) and this year my 'profit' before the cost of administration was £9,500 - and I recover all my time on enquiries and compliance reviews.

Why wouldn't you want to do it?

 

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How do you profit from this? I thought the client paid the premiums and in the event of an enquiry, the policy would cover our enquiry related fees.

I'm missing the bit where we can profit from this ???

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We are charged say £150 from the PFP/Abbey tax or whoever, then we charge say £180 out.

They set the premium to you, but you set the premium to your client.

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I thought you couldn't sell direct to clients

I may be wrong, but I was under the impression you could not act as an intermediary. I know you can buy block cover so that the insured is the practice, but not act as an intermediary where it is the client that is insured.

Does anyone have any further guidance?

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How do you invoice clients

How would you invoice clients for this? In the sense is VAT charged? 

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block policy

 I have a block policy that covers all clients but the practice is insured. I then charge clients a service fee being the premium I pay apportioned between my clients. Plus my 'mark up'.

I charge clients about £14,000 and pay CCH £4,500 hence my £9,500 'profit'. I love it! (and so do clients as they have great cover and peace of mind).

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VAT

Yes VAT is charged on this service. It is not insurance as I am not FSA registered

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