Hundreds of financial advisers are threatened with closure by European regulations on professional indemnity insurance.
However, a further European directive on PI cover is due in April 2006 and this promises a report on the appropriateness of the 2005 requirements. Paul Smee, of the Association of IFAs, is reported as saying: “Given this review, we will be pushing the FSA very strongly not to take precipitous action in advance of the review being completed.”
But a spokesman for the FSA is reported as saying: “Because we have to comply…firms have to get PII or a comparable guarantee or they will not comply with FSA rules. Ultimately we, (the FSA) would have to take action against them and stop them trading”.
The options are clear to all financial advisers and trade associations. As a wake-up call and statement to the Government which should be fighting against this legislation on our behalf:
1: We should lend our support to the UK Independence Party.
2: Our various so-called trade associations should be beating down the door to No 10 and urging this Government to fight our corner.
3: As an industry, we should select one life office at random and boycott it for all new business for just one week. Similar to petrol pricing and the boycotting of one major supplier, the affected life office would have to sit up, take note and act on our behalf.
4: We should all deluge our MPs and MEPs with our concerns.
If hundreds of financial advisers are closed, we are talking about a massive loss to this country's economy through our personal and corporate spending power. The worst-case scenarios will see destitution and bankruptcy.
With only three PI cover providers in the market place at the moment and some of those quoting ridiculous terms (£30,000 annual premium with £25,000 excess for a start-up IFA with no history) where is the market capacity going to come from?
The Financial Management Group,