View more on these topics

Smee&#39s warning on PI for loan and general brokers

The FSA&#39s extension of mandatory professional indemnity insurance to up to 35,000 general insurance and mortgage intermediaries could stifle an already constricted PI market, Aifa has warned.

Director general Paul Smee says he has serious concerns about the proposal outlined in CP174, published last week, to force advisers to have compulsory PI insurance once they become regulated by the FSA in late 2004 or early 2005.

IFAs wanting to give mortgage or general insurance advice will not have to extend their cover but Smee warns they will still be affected because the overall size of the market will be reduced.

He says there are questions to be answered about the capacity of the PI market to absorb between 10,000 and 35,000 firms that may seek authorisation under the new regime.

Members of both the MCCB and GISC are required to have PI cover but, with a combined membership of about 19,000, they will not make up the total number applying for authorisation.

The FSA says mortgage brokers should have adequate cover but general insurance firms may have to increase cover. It proposes PI cover of the higher of £680,000 or three times annual income for general insurance firms and £500,000 for mortgage advisers.

Smee says: “We need more analysis of the practicalities of the PI market delivering this cover at reasonable prices and reasonable rates. When it becomes a statutory regulatory requirement, how will the PI market react? Will it say this is the FSA, the FSA reviews things, we will have to hike our rates?”

FSA spokeswoman Kate Bristowe says: “We are acutely aware of the difficulties experienced by investment firms. In the CP, we have specifically asked firms whether the market is sufficient to meet their needs.”


People say wages must double to preserve lifestyle

Most people believe they will need to double their income over the next 10 years to maintain their current lifestyle, according to research from fund company Insight Investment.Asked by the HBOS-owned fund firm to estimate the salary they will need in a decade, the average amount suggested by 72 per cent of respondents was £45,729, […]

The miles file

April is the cruellest month, wrote TS Eliot in The Wasteland. It will certainly be a difficult time for thousands of savers who sank their savings into a generation of stockmarket-linked bonds with tempting headline rates of return.Four such products, now called precipice bonds by our friends at the FSA, reach maturity next month. Barring […]

Norwich Union investors prosper through bond

Norwich Union has established the Prosper income bond, a guaranteed equity bond that offers investors the choice between income and growth over a five-year term. The bond is linked to the FTSE 100 index and investors can choose to take income of 5.5 per cent a year, 0.44 per cent a month or 29.6 per […]

Isa portfolio offers from Saga

Provider Saga Investment Direct is cutting the initial charge on two of its equity Isa portfolios to 0.25 per cent from 4 per cent until the end of April. Investors can choose either an income or growth portfolio, and investments will be split equally between four funds to provide instant diversification.The Saga Income Portfolio invests […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    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