The Financial Conduct Authority (FCA) has paid at least three unnamed major insurers a visit amid a continuing review of professional indemnity funding. The goal is to look at reforming the Financial Services Compensation Scheme (FSCS).
A report by Mortgage Strategy said PI cover has been attacked by the heads of both the FCA and FSCS in recent years for failing to adequately cover individual advice firm liabilities. “The FCA is carrying out a review of the professional indemnity insurance market as it attempts to find ways of making policies work better for advisers,” it noted.
It has also been reported that the FCA has sent insurers questionnaires for the purpose of gathering more data on the market.
“Discussions with the market have centred around potentially increasing the minimum amount of PI firms have to hold from £975,000 for a single claim, and higher than the £1.5 million for aggregate claims,” said the report.
It added that the regulator suggested it could lower the limit that PI insurers can charge for excesses. Another possible change is not allowing providers to exclude insolvency or exclude the FSCS from being a claimant in policies.
The review will be concluded before the end of the year.
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