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Reality bites into EU&#39s PI policy

Perhaps some sanity may prevail over European Union policy on PI insurance when it runs into that reliable frustrator of many a political initiative – reality.

The EU is requiring intermediaries to have h1.5m of cover from next year. This is bad news for the UK&#39s IFAs which could see their burden increase even further.

The FSA has accepted that it will not be able to stop the insurance mediation directive bringing in this onerous and, in Money Marketing&#39s view, absolutely unnecessary requirement next year.

But, as was revealed by FSA managing director David Kenmir in the Fair Deal for IFAs forum, the regulator has at least secured an early review date from Brussels.

The FSA is hoping that in a few years hence it can change the requirement to a combination of PI and cash in the business to make up the h1.5m level.

And where is reality biting? Well, all those brokers in the EU which are currently unregulated face having to get PI, too. Where shall Greek brokers, to take the example used by Kenmir, source this cover?

Well, until recently, many on the continent thought that the market might be served by Lloyd&#39s of London, the insurance market which is as every IFA knows awash with affordable cover. Or not. Indeed, apparently, Lloyd&#39s is bemused that it might be seen as any sort of source for cover for Europe when it is reluctant to service a market it already knows here.

All this is actually good news when policy hits reality.

The problem is that it cannot be changed in the short term. The FSA has accepted the European move as inevitable. But before a review can happen, it could very well be the straw that breaks many a broker&#39s back.


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