The Financial Conduct Authority (FCA) has said the inability for firms to compensate consumers via their professional indemnity insurance is “unfair”.
In a ‘Dear CEO’ letter published on Tuesday (21 January), addressed from FCA director of life insurance and financial advice supervision Debbie Gupta, she said the transfer of these compensation costs to other market participants via the Financial Services Compensation Scheme (FSCS) levy places an unnecessary burden on other firms.
“It also threatens confidence and participation in financial services market,” she added. She said the FCA was concerned some advisers were holding “inadequate” financial resources and professional indemnity insurance (PII) for the business activities they carry out.
On Monday (20 January), the Personal Finance Society said more than 30 advice firms turned their backs on offering pensions transfer advice from October to December 2019 2019 due to problems obtaining PI cover.