FCA's Gupta sees no reason for PI exclusions

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FCA's Gupta sees no reason for PI exclusions
ByAmy Austin

She added: “Regarding insurance companies we are doing further work on the insurance and how the exclusions are arising and this continues to be an area of significant focus for us because yes, you are absolutely right in that this is one of the ways that we can get improved outcomes in this sector.”

Ms Gupta has previously warned advisers they must ensure all of their business is covered by their insurance. Speaking at the Personal Finance Society's annual conference in November she said: "Appropriate cover should not exclude relevant lines of business, such as defined benefit transfers.

"Simply put, a firm must at all times be able to meet its liabilities as they fall due."

Stephen Kinnock, Labour MP for Aberavon, also questioned Ms Gupta on what the regulator was doing to improve advisers’ PI and why the industry has not seen any action sooner.

Mr Kinnock said: “Prevention is better than cure. You will always get some rotten apples in a barrel but the job of the government and the regulator is to put a system in place which takes that to an absolute minimum.

“In the solicitors industry [...] if a company is found to be conducting malpractice those who are damaged by this receive full compensation through their insurance system not through the FSCS. 

“If we had a proper PII system in place, like they do in the legal industry, and apply this same system to IFAs, you would have a safe net which catches and compensates those outside the FSCS and actually resembles the losses people suffer.

“My question to the FCA is why aren’t you pushing to make this happen?”

To this Ms Gupta responded that PII was a requirement and IFAs were unable to carry out transfer advice without this insurance.

Meanwhile, also at the meeting, MPs and representatives of steelworkers noted the next biggest risk to steelworkers was being targeted by claims management companies.

When asked by FTAdviser what the regulator was doing to stop this Ms Gupta said: “CMCs' work is certainly something which concerns us and we are very aware of how it has played out in this sector and is playing out in other sectors. 

“They are very much part of our regulatory oversight.”

The British Steel pension transfer scandal came about after members of the British Steel Pension Scheme were asked to decide what to do with their pensions as part of a restructuring process in 2017.

As a result about 8,000 members transferred out of the old scheme, with transfers collectively worth about £2.8bn.