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FSA bids to cut PI rates

The FSA is in discussions with PI brokers in a bid to reduce the premiums that IFAs have to pay to retain their authorised status.

The regulator is telling the PI brokers what it regards as an appropriate policy and is discussing what is in the regulatory and legislative pipeline in an effort to help PI companies determine premiums with better knowledge of future events.

The PI market has been wary of regulatory developments since the pension misselling crisis, with concerns over endowments, FSAVCs and income drawdown fuelling further concerns.

FSA spokeswoman Louise Buckley says: “We are having talks with a number of PI brokers. We are telling them what we think are acceptable policies and giving them a picture of what is going on as far as legislative and regulatory changes. This should lead to lower-risk premiums for IFAs.”

IFA Wentworth Rose managing director Philip Rose says: “This is really welcome. It is something that we have been waiting for. The FSA must take a hand in the setting of PI premium rates, given the limited number of providers still operating.”

IFA Roberts Clark director Ashley Clark says: “I think it is positive news from the new regulator. It is overdue as we are paying way over the top, particularly ourselves as a new firm. We are paying for the mistakes of less qualified advisers in the past.”

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