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Swip&#39s Wylie rules out providers&#39 PI subsidy

There is no case for product providers to subsidise IFAs&#39 professional indemnity insurance costs, according to Scottish Widows intermediary & partnership director Robert Wylie.

Speaking to Money Marketing this week, Wylie ruled out provider financial involvement in the PI crisis, saying it would not make commercial sense even if the economy was doing well and certainly not at a time when belts are being tightened across the industry.

Wylie defended Widows&#39 decision to take stakes in listed IFAs such as Inter-All-iance, Berkeley Berry Birch and Millfield although he says it is doubtful that the company would invest directly in unlisted firms.

He says Widows is looking forward to taking advantage of depolarisation by developing additional distribution partnerships but in addition to rather than at the expense of its position in the IFA market.

The company is in talks with a number of potential partners, including financial institutions, as well as retailers and utility companies not currently in the market.

Predicting further consolidation among providers, Wylie says that in a mature market, the top six would control 60-70 per cent of the market compared with the current figure of 30-40 per cent.

He says: “I think it would be well received on the distribution side of the industry. Whether there would be a desire on the provider side to write a cheque to resolve the PI issue, I think the honest answer is no.”

LIA head of public affairs John Ellis says: “I think that is an over-rigid interpretation of the law of agency. If product providers stand to one side and allow IFAs to be hammered out of existence, how are they going to distribute their products?”

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