Fears that increased regulatory costs and higher professional indemnity insurance (PII) premiums could lead to a squeeze on the availability of independent financial advice has prompted many IFAs to write to their MPs to demand action.
Advisers are concerned that they will face higher bills this year to fund the Financial Services Compensation Scheme (FSCS), which compensates customers when financial firms fail.
IFA David Penney of Penney Ruddy & Winter started the campaign when he wrote to his MP to ask for action on the FSCS levy. He took to Twitter to encourage other advisers to write to their MPs as well.
Now the Personal Finance Society (PFS) has asked its 9,000 members to write to parliamentarians. The PFS wants future compensation payments to be funded by a levy on the £9 trillion of retail assets managed by the UK investment industry rather than the current compensation model which is funded by a combination of PII cover and the FSCS.
Keith Richards, chief executive of the PFS, said: “We are encouraging financial advisers to tell MPs and other policymakers about what is happening in their community in their own words and giving them the option of referencing the Personal Finance Society’s proposed solution as a starting point for debate in a clear and accurate way.”
The Impartial Financial Advisers Association (IFAA) has called on IFAs to write to Mel Stride, Chair of the Treasury Select Committee (TSC). Director General Garry Heath says that the TSC is the only parliamentary body with the power of regulatory oversight of the financial services industry. “We need to push our issues higher up their agenda,” he said.
James Burgoyne of Brunel Professions says that writing to MPs may help to prevent further burdens being placed on the advisory community but warns IFAs that their insurance costs are directly linked to their previous claims records and future exposures.
“IFAs should focus on adopting the highest possible standards of risk management and eliminating complaints in their businesses. This is the best way to demonstrate to PII insurers that their firms are well-managed, which in turn will help to ensure they can secure the most competitively-priced PII cover,” he said.
The PFS’s news release and template letter has been published on its website. The IFAA has also published its template letter on its website. Reports about the development have been published by FT Adviser, New Model Adviser and Professional Adviser.
Categorised in: Financial Services PI News
This post was written by James Burgoyne