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FSA looks at scrapping PI

The FSA is considering scrapping mandatory professional indemnity insurance for IFAs as one option in its Integrated Prudential Sourcebook consultation paper.

In the same paper, published this week, it unveils plans which could force intermediaries holding client money and fund managers to increase their reserves and regulatory responsibilities to the levels expected of international banks. Autif warns that the proposals would hit fund managers very hard.

The FSA says that while offering consumer protection, PI may act as a barrier to entry into the IFA market. The consultation paper says: “We recognise that the arguments for or against a mandatory PII requirement are not clear cut.”

Aifa director general Paul Smee says: “I am glad the FSA is having a proper review of the implication of PI. It is important to review the rationale for the requirement, not just its detail.”

ProAct Legal principal Gareth Fatchett believes the move is highly unusual and, without PI, IFAs will be totally liable personally.

An FSA spokesman says: “IFAs, who by and large do not hold client money, would find things simplified. All that we would require from IFAs is a bit of a buffer against disorderly exit.”

On the threat to fund firms, Autif director of regulation and taxation Julie Patterson says: “This is a big and unacceptable hit on our industry. This is going to be a lot of work. Our industry is suffering four hits – from the FSA, Basel 2, the EU capital adequacy directive and the Ucits negotiations. It is all a complete muddle.”


Punter Southall Financial Management – Gift A Stakeholder

Tuesday, 12 June 2001.Type: Stakeholder pension.Minimum premium: £20.Minimum-maximum ages: From birth-no maximum.Fund links: Scottish Equitable cash, Scottish Equitable mixed, Scottish Equitable global, Scottish Equitable long gilt, Scottish Equitable balanced lifestyle, Scottish Equitable dynamic lifestyle, Scottish Equitable European, Scottish Equitable North American, Scottish Equitable UK equity, Scottish Equitable UK index tracker, Scottish Equitable ethical care equity, […]

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Adopting the standards set by the new ethical indices FTSE4Good will improve a company&#39s exposure to risk and preserve shareholder value, according to industry experts. The claim comes as FTSE4Good meets on Friday to finalise the qualification and exclusion criteria for its socially respon- sible investment indices ahead of their expected launch this summer. FTSE4Good […]

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Horlick condemns star fund manager culture

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Simon Fletcher

Auto-enrolment: pay attention or pay the price

By Simon Fletcher

As a chief executive officer of a business in the financial services sector, I have been dealing with the introduction of auto-enrolment for our clients for some time, but I can also speak from an employer’s point of view, having to go through the process ourselves.


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