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Pi fears on rule confusion

IFAs could be hit by negligence claims due to the compliance and risk management obligations of depolarisation, warns PI broker PYV.

Advisers are expected to comply with the depolarisation regime by June and the FSA has published a 130-page document outlining rules.

But PYV director Neil Pointon says some of the rules are ambiguous and details of how they will be applied are unclear. He says consumers do not realise an adviser can act as an IFA, a single tie and a multi-tie. He believes this may cause confusion about the service an adviser can offer and could bring claims of misleading advice.

Pointon says most PI policies do not provide protection for firms which break regulations. All new PI policies from PYV, placed with Chubb, get automatic inclusion of legal costs to defend claims from falling foul of FSA regulation.

Pointon says: “The insurance market has not yet agreed a standard approach to covering multi-ties. It is still to be seen whether they will seek cover in the insurance market or, like tied agents, look to pass on any liability and the onus of arranging cover on to the product providers.”

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