The FSA plans to soften its attitude towards IFA firms unable to get compliant PI cover as it takes steps to address what it has identified as a serious concern.
IFAs having difficulty getting PI cover because of the state of the market rather than past wrong-doings are to be treated more “kindly” by the FSA in a move which has been welcomed by IFAs and Aifa.
This week, the FSA asked Aifa to survey its membership to identify if firms are having difficulty getting cover and how much they are paying.
FSA director of investment firms David Kenmir says the regulator hopes to take action by November when many policies are up for renewal.
Under the PIA, PI insurance was mandatory but firms which had difficulties in getting cover were often handled with discretion. With N2 and statutory regulation, that discretion was removed and anyone without PI cover faces dis- ciplinary action.
The FSA is trying to redress the balance by recognising other factors such as capital adequacy of individual firms.
Aifa director general Paul Smee says: “We are pleased that after extensive pressure the FSA appears to be taking the matter seriously and coming up with an imaginative solution.”
Kenmir says: “You need to look at each individual case on its own merits. You might look at a firm more kindly because its overall capital adequacy position is sufficient. We will work with firms which have made genuine attempts to get compliant PI cover.”