Stating why he believes the IFA community has been particularly badly hit by the lack of capacity in the PI market and the steps needed to help remedy the situation, Paul Smee said: "The purpose of Professional Indemnity (PI) cover must be clearly defined because there is currently a divergence of views between the FSA and the PI market.
"The FSA sees its requirement for PI cover as protecting consumers. This is not what the PI market sees itself providing. PII cover protects firms. This is why we believe that in the long-term, IFAs should not operate without PI cover because it puts their businesses at risk.
"There should also be better regular and direct communication between the regulator and the PI market to increase each other's understanding of the way in which they operate. The regulator must continue to make it clear that under the Financial Services and Markets Act, retrospective reviews of past business are highly unlikely to take place. This is because this Act has a much more complex process to go through before such a review can be instigated.
"We also believe that a clear definition of what constitutes mis-selling would be evidence of the regulator's intentions in this area and would help give confidence to the PI market."
