FSA urged to close complaints liability 'loophole'

Laura Miller
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The FSA must close a ‘liquid­ation loophole' which many advisers use to shuffle the cost of complaints onto the industry-at-large via the FSCS, according to a claims management firm.

Paul Nedas, chief executive of Financial Advice Liability, says he knows of a number of firms which have entered voluntary administration rather than pay large excesses on their professional indemnity (PI) insurance when claims are made against them. He is now calling on the industry to support the inclusion of firms’ PI insurer and coverage on the FSA register. The regulator must also do more to monitor complaints procedures to ensure that PI providers have confirmed receipt of notification regarding potential claims, he says. “Otherwise the potential exists for yet more claims to...

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