Take cover

However, the increasing cost is of sufficient concern to warrant AIFA reopening its negotiations with PII insurers to get a better idea of how much premiums are likely to be in the future.

Exclusions

Exclusions to policies change year on year depending on the areas that are perceived to be the greatest risks. In the most extreme circumstances, some insurers may decide not to quote. In these instances, firms are required to apply for a waiver from the FSA in order to continue trading in this area. Section 148 of the Financial Services and Markets Act (FSMA) explains that regulated IFAs and brokers are entitled to apply for a waiver from the FSA if they can prove that the granting of a waiver would not result in "undue risk to customers". However, firms that are also in the jurisdiction of the Insurance Mediation Directive are exempt from this rule, meaning that intermediaries covered by both sets of regulations will not be able to obtain the waiver.

If all else fails

Firms that have been unable to obtain PII cover through the traditional means may find more success by joining a network or merging their existing activities with a firm that already has a PII policy in place. The FSA has the power to stop a firm conducting regulated activities and suspend permissions until it has obtained complaint cover. It may, however, choose to allow that firm to continue trading in other areas. Advice firms considering their pathway should consult Section 45 of the FSMA.

ENDS