With all the problems rearing their heads about PI insurance, maybe the answer is to merge it with the compensation scheme.
The FSA could then decide that as it is investors who have the protection, they should pay for it. An easy way to do this would be a levy on every pound invested (including deposit accounts) which I would guess needs to be far less than the 5 per cent IPT tax on general insurance premiums.
A merger and funding such as this would prevent all the problems that IFAs are experiencing in getting PI cover at a reasonable cost.
The FSA could I am sure get some sort of underwriting cover if only by a consortium of insurance companies.