The FSA has set out its vision of the key characteristics for the professional indemnity insurance (PII) market for independent financial advisers (IFAs).

The announcement is the FSA's latest attempt to address the concerns of IFA's arising out of the reduced capacity in the commercial liability market.

The FSA said it expects the following characteristics for the PII market in future:

  • The regulatory requirements set minimum standards in key areas but allow flexibility in policy wording.
  • There is enough capacity in the market to provide PII cover for all those firms that are required to have it.
  • The insurance market has a better understanding of the risks of insuring IFAs.

    FSA director David Kenmir, said: "We have addressed some of the concerns expressed by market participants but only those that don't compromise consumer interests.

    "This is the latest step in our ongoing work on PII. We will be consulting shortly on more flexible requirements and will work closely with IFAs, trade bodies and the insurance industry on the other issues that need to be tackled to improve the PII market for IFAs."

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