Last week, Money Marketing reported on the difficulty we have had in obtaining renewal cover on our PI insurance -not an unusual occurrence for the small to medium-sized IFA in the current climate.
I am pleased to report that we have now obtained cover and it will come as no surprise to any IFA that the premium required is very much higher than last year. In fact, we have calculated that the cost of our cover has risen by 10.5 times in the last 24 months.
Why is that? The FSA would have us believe that this is due to economic conditions and lack of capacity in the market. This is far from the whole story.
The biggest single contributor to the PI debacle is the FSA itself, although it would never admit to this.
Unless it is prepared to define misselling and reassure the market that there will be no further hindsight reviews, then the problems will continue.
The tinkering around the edges contained in CP169 demonstrates a lack of understanding of its role in the problem.
Through your pages, can I thank the many IFAs who have called me to offer support following the article. I have heard many stories from them that have put our problem in the shade. Many highly competent and caring practitioners are unable to obtain cover, compliant or otherwise, and struggle to understand why this is.
The cost of our cover now constitutes the single biggest item of our expenses as a business, higher even than our staff costs. Fortunately, we are financially robust enough to pay the premium required.
A number of callers have told us of their conspiracy theory that this is all about eradicating the small to medium-sized IFA. I do not subscribe to that theory although that might still be the end-result.
What we know for sure is that we do not wish to be faced with the same problem in a years time. This, I am afraid, will be the situation unless the regulator takes action now.