Leading wealth management and financial advice association PIMFA has today raised concerns over the Financial Conduct Authority’s (FCA) proposal to increase the maximum amount of compensation the Financial Ombudsman Service (FOS) can require a financial services firm to pay out.
The proposed increase will see levels rise from £150,000 to £350,000 and the association highlighted concerns about the potential impacts that the rise could have on the competitiveness of the market and the advice gap.
Commenting, PIMFA CEO Liz Field said: “PIMFA are deeply concerned that this proposed move could act as a barrier to entry for smaller firms as this will impact a firm’s ability to obtain Professional Indemnity Insurance (PII) at a viable economic cost.
“This could reduce the number of firms within our profession and further widen the advice gap. We will be responding to the consultation paper and raising our concerns with the FCA. Our profession has an essential role to play in helping to build a culture of savings and investments, and this move could severely impact firm’s ability to be able to provide this vital service to clients.”
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