The FSA has released a consultation paper (CP 169) on professional indemnity (PI) insurance for independent financial advisers (IFAs).
The paper was designed to formalise the modification of cover requirements for IFAs, which were relaxed in November 2002 after the hard market meant many IFAs were unable to obtain compliant insurance.
It will also look at the long-term future of PI for the investment industry.
FSA investment firms division director David Kenmir said the paper introduced policy options such as a trade of between PI and capital and the possible formation of a mutual insurer for IFAs.
However, he warned the FSA would not be a soft touch for irresponsible firms.
"The bottom line is that if firms do not have adequate resources overall, we'll take action against them," Kenmir said.
The FSA found that 76% of IFAs successfully obtained cover in the September 2002 traditional renewal period.
