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FSA&#39s recipe is for an IFA mutual PI

An IFA-funded mutual insurance scheme could be the answer to the PI crisis facing many advisers, according to the FSA.

As the FSA looks at solutions to alleviate the problems IFAs are having with finding PI cover, head of investment firms David Kenmir says he has been informally approached with the idea of a collective pool funded and managed by IFAs rather than run by PI insurers.

Kenmir says the proposal is one of many that the FSA is considering.

Another idea would be for product providers to subsid-ise IFA costs, as they do for the ombudsman and compensation schemes.

Kenmir says: “We are engaging with the market to come up with a solution. If the commercial market is not going to provide the capital, then maybe there is a case for IFAs banding together to create their own mutual scheme.”

Baronworth Investments director Colin Jackson says: “If there was an alternative to existing insurers, I would be all for it. It would have the effect of bringing premiums down because of the introduction of competition.”

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