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FSCS chief welcomes ‘serious questions’ on PI

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Financial Services Compensation Scheme chief executive Mark Neale has welcomed the “serious questions” being asked about the professional indemnity insurance market in a recent FCA consultation.

The regulator published its consultation on the FSCS funding model last week.

The consultation says the regulator is considering introducing mandatory wording on professional indemnity insurance policies as well as ensuring policies provide cover for any FSCS claims, introducing restrictions on policy excess levels and restricted use of exclusions for some products.

In a blog on the FSCS’ website, Neale says:It’s been clear to FSCS for some time that these policies often afford firms little or no protection against claims and can exclude recovery action by FSCS after a failure has occurred. In other words, FSCS is promoted from last resort to first resort when something goes wrong.”

Neale also supports re-thinking compensation limits, for example, the FCA is also considering updating the limits on consumer coverage following the pension freedoms.

He says: “There is a close link between consumer confidence and consumer understanding. As things stand, the differing compensation limits for different products work against understanding.

“In the case of retirement savings, these differences are more salient than ever now that people have choice about how to invest to generate an income in retirement.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Have a guess what will happen to PII premiums and access to cover if the regulator imposes standard policy wordings restricts levels of excess and insists on covering off FSCS claims.
    Go on have a guess?!

  2. He’s not bothered about that Nick, as long as he shifts the emphasis of claims away from his organisation, it is a problem solved (of course, it isn’t though is it, because the real solution should be to limit the potential for claims and not to facilitate a means by which to pay increasingly more by raising limits, as he suggests). If he was being balanced in his viewpoint, he would have added .. ‘and of course we need to ensure that the cost burden does not increase for the sector and for those clients and consumers who ultimately are burdened with paying our levy’. Selfish agendas and self preservation, that’s all it’s about I’m afraid, not real meaningful change, as that’s too difficult (like stopping advice and sales of unregulated products by regulated firms)!

  3. Here’s a serious question. Why not get the FCA to do its job properly (some bloody hope) and enact measures to prevent uninsured losses falling on the FSCS?

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