I note with interest that some of the letters you are printing in your paper on PI and other regulatory subjects are becoming anonymous as far as the authors are concerned, presumably on the grounds of fear of retribution. This matter is far too serious for those with a grievance to remain anonymous.
From what I can gather, there are probably 1,000 firms without compliant PI cover or any PI cover and probably the matter is getting worse on a daily basis. Although the FSA staff are expressing their sympathy with our predicament, when it really comes down to it, the comment that I was given over the telephone was that: “The rules say you must have it, so you must have it.” This is probably the most accurate reflection of the FSA's practice at the point of delivery.
Are we to go on indefinitely in the situation where the regulator insists that we must have PI insurance and the PI insurers say they are not going to give it to us? Is this, as one of your correspondents in your July 24 issue suggests, the application of a hidden agenda of exterminating the small IFA?
As one of your anonymous correspondents points out, the mess we are in now can be blamed at the way in which regulation of financial services in the UK has been delivered. It is no wonder, bearing in mind what has happened in the past, that the PI market does not want to know about offering terms to IFAs. So we currently have an impasse and the only way out of it is human sacrifice, the human being the IFA.
This firm is currently in the situation of not being offered any terms for PI insurance despite the fact that in a 23-year period we have had only one PI claim, which arose as a result of the pension review. While we can write letters to Money Marketing bemoaning our situation, this is going to get us nowhere apart from the venting of spleen and eventually ceasing to trade.
This firm has taken some more direct action in writing to the chief executive of the FSA and to our local MP. I wonder how many others who expressed themselves in your letters page have done the same?
There is a very real crisis facing our industry, the consequences of which will be very dire for a great many of us.
If the true purpose of PI insurance is to protect the adviser (a point which now seems to be conceded), we should be free to take our own decisions as to whether or not it is economic for us to buy.
If no PI market exists, then the only serious alternative is for increased levies to the Financial Services Compensation Scheme at least to apply to small independent firms which have not a hope in hell of getting any form of PI cover, whether compliant or not. To that extent, big institutions, which appear to be exempt from PI insurance and which, of course, stand to benefit if the small IFA disappears, should be asked to make a contribution by way of a subsidy in this respect. This will be particularly relevant to those companies which depend exclusively or largely on IFA support for their business and whose trading fortunes might suffer severely if a great many of us disappear.
In any crisis, emergency measures are needed. In my opinion, the requirement for mandatory PI should be suspended while some acceptable solutions are found before many of us lose our livings.
The more of us that make these points to those that matter, the more chance that somebody is actually going to take notice in the short term. Another consultation process may deliver reforms but after most small IFAs have been forced to take early retirement or worse.
David Hackett Highfield Financial Planning,Tonbridge, Kent