CISI warns over FCA compensation limit hike
23 April 2019
The Chartered Institute for Securities & Investment (CISI) has asked the FCA for urgent clarification on the issues surrounding the Financial Ombudsman Service’s (FOS) compensation limit hike, warning that it could have serious consequences for its members.
In a letter to the FCA CEO Andrew Bailey, the CISI said professional indemnity insurers were already faced with a hardening market and the decision to increase the compensation limit from £150,000 to £350,000 from 1 April, had only exacerbated the problem.
According to CISI CEO Simon Culhane, the rising costs could not only reduce the number of insurance providers, but significantly increase costs for advisers, with firms reporting that premiums are more than doubling.
He said: “Our members are concerned, many of whom have satisfied the Institute’s criteria for their firms to be accredited, that it is the honest and trustworthy organisations who are forced to shoulder further costs in reaction to misconduct by others.”
The CISI said that the burden of increased premiums for its SME members had left many, particularly the financial planning and smaller wealth management firms, “alarmed” at the potential ramifications.
“The short notice given to advisory firms and the lack of wider consultation about the potential impact of this rise means that there may be serious unintended consequences as a result,” said Culhane.
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