"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 "
The proposals coincide with FCA plans to extend access to the Ombudsman to around 210,000 additional SMEs.
SMEs with an annual turnover below £6.5m and fewer than 50 employees, or an annual balance sheet below £5m will now be able to refer unresolved complaints to the ombudsman service.
However financial trade association PIMFA has raised concerns over the new compensation limit and the potential impacts that the rise could have on the competitiveness of the market and the advice gap.
Liz Field, CEO of PIMFA, 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 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 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”.
