Campaign group warns FSA seeking to shut down Arch Cru IFAs

Mr Egerton said: “For the purpose of determining whether your firm meets company act solvency requirements... you are certainly allowed to assume that when you notified an insurer that a circumstance that might give rise to a claim had arisen, any policy under which you could make a claim would respond.

“You are also – unless and until the FSA successfully implements a consumer redress scheme – entitled to take a view both on the likelihood of complaints being made and the likelihood of the complaint being upheld by Fos and on the timing of any award that might be made.

“You can also take into account the possibility of legal and political challenges. Until recently the FSA rules allowed you to take a similar approach, not any more. The FSA rules thus place almost all advisory firms in an impossible position.”