IFAs must be looking skywards and asking whatever god they worship when the PI nightmare is going to end.
The screw is to be turned tighter still by the EU. From 2006, IFAs doing both insurance and investment business will have to have £1m PI coverage to comply with the insurance mediation directive and a further £500,000 coverage to comply with investment services directive or £25,000 in capital.
It could fracture the market between those doing investment business and those doing life and pension business and perhaps spell the end of the smaller IFA working across the whole spectrum of business.
The EU is currently piling layer after layer of unnecessary costs on to an intermediary sector it clearly does not understand and the concept of subsidiarity appears to have been forgotten.
The FSA has taken a practical, flexible position on PI but it needs help from the Treasury to win more of these European-level arguments. The EU, rather than protecting consumers, risks denying them access to advice. Someone should get the message through to Europe before what is simply reckless ill-informed regulation does any more damage.