View more on these topics

More PI woe as EU is set to force 50% rise in IFA cover

IFAs have condemned as pointless a new EU directive that will force IFAs to increase their professional indemnity cover by 50 per cent by April 2006.

Already reeling at the financial pain of dealing with the ins-urance mediation directive which requires firms to have £1m cover by January 2005, it has emerged that a separate directive places further PI demands on firms just over a year later.

The market in financial instruments directive – also known as ISD2 – will force the vast majority of IFAs to take out £500,000 extra cover, set aside £30,000 capital or have a combination of the two in place by April 2006.

While the IMD affects IFAs doing insurance business, Mifid hits those doing investment business and the vast majority that do both will have to comply with the PI requirements of each.

Under Mifid, only those few firms transacting investment-only business with no insurance business on their books will face greater flexibility, with the only requirement being to hold £1m PI cover or £33,000 capital.

Aifa director general Paul Smee says: “This does make the PI situation worse but the new regime introduces the concept of flexibility in trading PI for capital.”

Byrne Williams managing director Tony Byrne says: “This is another nail in the coffin for IFAs and shows that whatever the Government says, it does nothing for us.”

Cambourne Financial Planning director Mark Loydall says: “The question is what this additional cover does to protect the public and the answer is very little. But for the IFA, when PI is already an extremely difficulty area, this is no help whatsoever.”

Recommended

Stop EU inflicting more damage

IFAs must be looking skywards and asking whatever god they worship when the PI nightmare is going to end. The screw is to be turned tighter still by the EU. From 2006, IFAs doing both insurance and investment business will have to have £1m PI coverage to comply with the insurance mediation directive and a […]

Pru could pass rivals on with-profits, says Cazalet

Prudential could gain significant distribution in the building society sector by nailing its colours to with-profits distribution, says a top independent analyst. Cazalet Consulting analyst Ned Cazalet believes the post-depolarisation carve-up could enable the Pru to overtake Legal & General and Norwich Union, the biggest players in the sector. Axa and Zurich also have links […]

Man Investments – Man Global Strategies Diversified Series 2

Type: Capital protected fund of hedge funds Aim: Income or growth by investing in managed futures and hedge funds Minimum investment: Lump sum $ 50,000, euros 50,000, CHF 50,000 Place of registration: Bermuda Investment split: 33.3% arbitrage, 30% managed futures, 15% directional, 13.4% equity hedge, long/short equities 8.3% Term:13 Years Return: Capital bonds 12-15% growth […]

Brown aims to discourage pension saving, claims Altmann

Pension experts have accused the Government of actively discouraging pension saving to encourage consumers to carry on spending and maintain a buoyant economy leading up to the next general election. Speaking at last week&#39s Money Marketing Live conference in London, independent pension consultant Ros Altmann claimed Chancellor Gordon Brown is deliberately making pensions an unattractive […]

China’s economic bounce may already be over

By Mike Riddell (17 May 2016) Most people would explain the rally in global risky assets since mid-February as being primarily down to the spectacular volte-face from the Federal Reserve, where Janet Yellen (and others) dramatically toned down their narrative that the Fed would be hiking rates as many as four times in 2016. This explanation […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com