The Financial Conduct Authority’s (FCA) proposed “polluter pays” investment advice redress framework, which will force firms to hold capital to cover potential future claims, could result in an improvement to the “hardened” professional indemnity insurance (PII) market, the regulator has said.
The regulator released a consultation on its plans this morning (29 November) alongside a ‘Dear CEO' letter on the issue. It proposed a shake-up to investment advice compensation rules which will see firms set aside capital under a "polluter pays" framework. Capital deduction for redress: personal investment firms could result in firms being required to set aside capital so that they can cover compensation costs and "ensuring the polluter pays when consumers are harmed". The FCA explained the plans would mean personal investment firms - otherwise known as investment advisers - would ...
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