The FSA's own cost-benefit analysis of proposals in CP193 conclude that 45% of 4,000 personal invest...
The FSA's own cost-benefit analysis of proposals in CP193 conclude that 45% of 4,000 personal investment firms estimated to be affected will have to double their aggregate cover by £500,000.
This applies to firms defined as "very small" because of "relevant income" of £166,000 or less per annum.
The average premium cost increase per financial adviser will be £561 among these "very small" firms, the FSA says, resulting in an industry cost of more than £2m just to keep up with the minimum levels of indemnity required under the new rules.
The cost to all 4,000 firms of all sizes identified in the cost-benefit analysis would be nearer £3m, which the regulator blames squarely on the Insurance Mediation Directive.
Some firms will struggle, but the outcome will be beneficial to the industry as a whole, and to consumers, the FSA says.
"We expect the decrease in price per unit of cover purchased will, overall comprehensively outweigh any increase in the cost of cover than might arise from an increase in the level of cover that some firms will need to buy."
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