The proposed massive increase in the Financial Ombudsman Service pay-out limit is an ill-considered shot in the dark that could kill off the professional indemnity market and wound the advice sector.
It is widely recognised that the consumer’s need for financial advice is greater than ever, and so for the Fos to seek to impose such a potentially damaging increase is at best foolhardy and, at worst, grossly irresponsible.If a bank goes bust, the Financial Services Compensation Scheme compensation is limited to just £85,000, yet Fos is proposing to increase the pay-out in respect of financial advice to £350,000. The current Fos limit of £150,000 – almost double the banks’ FSCS compensation maximum – is already considered excessive by many commentators.
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