PIMFA comments on FCA’s proposed changes to FOS award limit
12th December 2018
PIMFA, the trade association for investment managers and financial advisers, responded to Financial Conduct Authority’s (FCA) consultation paper 18/31 today regarding the proposed significant changes to the Financial Ombudsman Scheme (FOS) award limit.
In their response PIMFA again stated their concerns regarding the proposal and the severe potential impact on the Professional Indemnity Insurance (‘PII’) market and member firms. In particular, PIMFA highlighted their belief that FCA should have actively engaged with the insurance market to make their own assessment of the impact of the proposals in CP18/31 and published it as part of the consultation.
The widening of access to FOS for small and medium-sized enterprises and larger charities and trusts, coupled with the proposal to increase the FOS’s claim threshold from £150,000 to £350,000 (index linked), increases the risk for PII underwriters.
In addition, there is no recognition of the proposals now confirmed in Handbook Notice number 60 that states all PII policies “effected or renewed from 1 June 2019 by Personal Investment Firms must not have clauses that limit the cover which would otherwise be provided by the policy, where the policyholder or a third party is insolvent, or where a person other than the Personal Investment Firm (e.g. the FSCS) is entitled to make a claim on the policy. The Handbook Notice make reference to one insurer estimating an increase of premiums of 25%”.
Liz Field, PIMFA CEO said:
“If firms face a significant increase in premiums and/or the level of excess in order to obtain PII, and/or underwriters change the risks they are willing and/or able to insure, then it could have a significant impact on competitiveness, including raising the barriers to entry for new firms and further widening the advice gap. It could also change firms’ service offerings, depending on their ability to obtain PII cover at an economic cost.
“Our profession has an essential role to play in helping to build a culture of savings and investments, and we are deeply concerned that this move could severely impact firm’s ability to be able to provide this vital service to clients”
Notes for Editors
About PIMFA – the Personal Investment Management & Financial Advice Association
- PIMFA is the leading trade association for firms that provide investment management and financial advice to everyone from individuals and families to charities, pension funds, trusts and
- PIMFA represents both full and associate member Full members provide a range of financial solutions including financial advice, portfolio management, as well as investment and execution services. They assist everyone from individuals and families, to charities and pension funds, all the way to trusts and companies. Associate members provide professional services to the PIMFA community.
- PIMFA leads the debate on policy and regulatory recommendations to ensure that the UK remains a global centre of excellence in the wealth management, investment advice and financial planning Our mission is to create an optimal operating environment so that its member firms can focus on delivering the best service to clients, providing responsible stewardship for their long-term savings and investments.
- PIMFA was created in 2017 as the outcome of a merger between the Association of Professional Financial Advisers (APFA) and the Wealth Management Association (WMA) with a history as a trade association going back 28 years – read more.
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