The FSA has granted Bristol-based IFA the Falcon Group a year's waiver from its requirements to obtain professional indemnity insurance in a move that could pave the way for other IFAs.
More than 20 IFA firms are applying for waivers through Proact Legal solicitor Gareth Fatchett, who believes this case will set a precedent.
The Falcon waiver, which represents a softening stance from the regulator over PI cover, was granted under section 148 of the Financial Services and Markets Act 2000. It means that Falcon, which has 105 RIs, will not have to take out PI insurance until January 31, 2004.
Using the firm's quarterly reports, the FSA established its turnover as £10m, with capital resources at £939,000, and judged that it had the resources to meet potential liabilities. However, a significant change in these figures could forfeit the waiver.
The FSA denies that this decision indicates a change in its approach. It claims it made IFAs well aware of their right to apply for a waiver when it contacted them by letter before the last set of renewal dates in October.
It says this latest decision will not open the floodgates for more waivers, saying each application would be judged on a case-by-case basis.
FSA spokesman David Cliffe says: “We have been saying all along that applying for a waiver is one route that firms could take, provided that they are holding the certain amount of capital required. Falcon has not insubstantial extra capital.”
Falcon group chief executive Allan Rosengren says: “Obviously, we are relieved to have resolved the situation. I suspect that the FSA's decision is probably down to the size and quality of the firm and the level of internal control. I think they will continue to be very selective. We do not know what will hap-pen with the cover once the waiver has run out.”