One key change to PII on which the FCA is consulting further ongoing from CP17-36 is the possibility of preventing PIFs from purchasing policies that exclude the insolvency of the policyholder or related parties, as the FCA believes these exclusions can prevent the FSCS from making a claim on the policy.

It is the insolvency clause that wiped out perhaps as many as 1,500 adviser firms in the UCIS crisis, as one after another UCIS firms went insolvent, and, by extension, firms with cheap PII providers declined to pay up, citing the insolvency clause. You will be pleased to know that IFAC’s chosen partner for PII – Howdens – never sold these policies, and were diligent in point this out each year both before these turbulent credit crunch years, and later on, in a “I told you so” way!

IFAs will have to hope that less flexibility in the PII market doesn’t simply reduce the supply available.

Responses to the FCA's second FSCS funding consultation are due by 30 January 2018.