An insurance liability product protecting individual IFAs - whether set up alone or working in a larger firm - from the "investigatory powers" of the FSA has been launched.
The product, a brainchild of Regulatory Protection Insurance Brokers (RPIB), specifically covers legal costs amounting from FSA action.
Howard Timmis, director of RPIB, says many advisers are likely unaware of the investigatory powers of the regulator and of the fact that, should the investigation reach court, that individual might be forced to bear the FSA’s, as well as their own, legal costs.
He also says the FSA is likely to broaden its investigative horizons now it is “settling down” after targeting the mortgage and insurance industries in 2004 and 2005 respectively.
“This product can protect IFAs if they suffer an investigation by the FSA,” he says.
“The general consensus is that the FSA will start to get a bit heavier now. Are IFAs aware of the investigatory powers of the regulator?
“They can subpoena you; they can raid your house, with a warrant of course.
“If you are a target of an FSA investigation, it heaps enormous pressure on your life. I’m not one to scaremonger.
“I was looking at how we can empower people to protect themselves against the awesome power of the FSA.”
All FSA regulated financial services firms must have a professional indemnity policy protecting themselves, and their clients, against negligence.
However, Timmis says this cover, as well as the current alternative – a Director’s and Officer’s Liability Insurance Policy – can be over-complicated and costly.
RPIB’s insurance policy - called Regulatory Protection Insurance - is available to any ‘approved person’ undertaking one or more ‘controlled functions’ in an authorised business as defined by the FSA. It is fully web-based.
Timmis adds: “It is specifically designed for the individual person and not the company they work for, although individuals may be able to recover the cost from their employer.”
Various alternative limits are available from £100,000 to £1,000,000 for each individual.
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