AIFA identifies the root cause of the problems facing IFAs in their search for PI cover as a compound of difficult PI market conditions worldwide and insufficient confidence between the regulator, the IFA community and the PI market. AIFA has asked the FSA to help restore that confidence; it welcomes more flexibility in the permitted balance between PI cover and a firm's other financial resources; and supports an industry-backed approach to make PI available on realistic terms to IFAs.
In its response, AIFA sets out three themes to help the PI insurance market for IFAs:
• Better dialogue between regulators and the PI market to build up trust and mutual understanding.
• A better regulatory relationship between PI and other financial resources.
• An Industry-based solution. AIFA is discussing with interested parties whether some sort of industry based solution can deliver properly priced, properly rated insurance.
Commenting on the move, Paul Smee, director general of AIFA, said: "By publishing CP169, the FSA has demonstrated that it understands there is a problem for IFAs in obtaining PI insurance on realistic terms. IFAs desperately need a better operating PI market. That can only be achieved if the PI industry's communication with the FSA improves."
