The FSA's proposed new professional indemnity insurance (PI) requirements should not tempt IFAs to avoid buying coverage against the costs of enforcement investigations, warned insurance law firm Reynolds Porter Chamberlain (RPC).
RPC said CP193 made no reference to coverage against regulatory investigations by the FSA, although it does require cover to be held to defend claims by investors.
Harriet Quiney, of RPC's financial services team, said: "Even though the Consultation Paper does not make reference to the need to seek cover for the costs of enforcement investigations, we think that IFAs would be taking risks if they did not purchase adequate cover."
"The FSA has not banned firms from obtaining cover against the cost of defending enforcement actions. If policies do not provide this cover, firms run the risk of finding themselves without legal assistance at a sensitive and difficult time and insurers may find themselves footing substantial bills for compensation which might otherwise have been avoided," she added.
