The regulator's plans for advice firms to hold cash reserves if conducting business outside their professional indemnity insurance (PII) cover will push firms to evaluate which products they use, advisers have said.
Informed Choice managing director and IFA Martin Bamford said the proposal from the Financial Conduct Authority (FCA) could act as a disincentive against recommending non-standard products not covered by PII. "I don't think people would get involved in selling products that are not covered by PII if they knew they had to put extra capital aside," he said. "Part of me isn't a huge fan of the idea, though, because we already have PI insurance, capital adequacy and the FSCS [Financial Services Compensation Scheme]. To create a fourth layer feels like an unnecessary cost - and that cost a...
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