The Financial Services Authority is hosting a special meeting of European regulators next Thursday to look at the impact minimum professional indemnity insurance requirements of the Investment Services Directive and Insurance Mediation Directive could have on all European advisers.
David Kenmir, director of the investment firms division at the FSA, told IFAonline last November he planned to invite European regulatory officials to London to discuss the PI situation, because its own work – to try and stabilize the cost and availability of UK-based PI cover – could yet be undone by the implementation of tough PI clauses set out in the European Commission’s proposed ISD.
Kenmir notes most European advisers have yet to encounter a PI crisis like that experienced in the UK but the introduction of specific PI regulations across the EU could further restrict PI capacity so some discussion is needed to try and pre-empt or prevent a European-wide PI crisis.
A meeting is being held on Thursday 11th March in London, according to an FSA spokeswoman, as the FSA believes regulators will benefit from hearing about the FSA's experiences of using PII as part of a prudential regulatory regime, and help them to develop their own policy and rules for European investment and insurance advisers.
In particular, the seminar will present an overview of the problem recently encountered in the UK’s PII market, how the FSA has so far tackled it, and what impact current EU proposals will have on both the existing UK and European regulatory regimes.
However, there could yet be serious complications to the whole EU process as officials at the European Commission and the European Parliament are racing to try and complete negotiations on the ISD by Easter, so it can be ascended and implemented by January 15th 2005 – the same day as regulation of the general insurance market is enforced in the UK.
It has been noted EU advisers will not be required to hold PI cover by that date, albeit they will need to find PII once different countries implement requirements.
Any differences of opinion about the contents of the ISD may not be resolved at all if the proposed document is not approved by April, because the the ISD could fall into a regulatory "black hole" if is not completed before European Parliament elections on May 1st.IFAonline
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