The Financial Conduct Authority (FCA) has stated PI policies can no longer limit cover where the claimant is the FSCS or where the policyholder has become insolvent, which risks increasing advisers' PI costs.
In the past, some professional indemnity (PI) providers have sought to limit their liability by preventing the Financial Services Compensation Scheme (FSCS) from making a claim on the policy. This was either through a specific clause excluding the FSCS as a claimant, or relying on broad, general insolvency clauses that excluded claims relating to the insolvency of the firm or of third parties, regardless of any legal liability the firm may owe to a consumer. The FCA, which decided to change the rules after a consultation, expected the move would help to bring down the cost of the FSCS...
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