FCA finds 'concerning' exclusion clauses in intermediaries’ PII

"We also expect insurers and managing general agents that provide PII in this area to review their products in light of the findings in this report"

The four types of exclusion clause were: suitability of insurer (11 policies), unrated insurers (two policies), non-admitted insurers (13 policies), and insurer insolvency (140 policies).

The FCA also found a high level of inaccuracies in policies, especially around the scope of cover for Financial Ombudsman awards and for any appointed representative a firm might have.

The review was performed to evaluate the individual policies purchased by a sample of firms to assess whether they complied with the FCA Handbook requirements.

It also wanted to assess the breadth of the market and availability of cover, considering both what policy limits firms are able to purchase and the extent to which they are able to obtain cover for all the activities they carry out.

More positively, the review found that there is sufficient breadth within the market to provide choice and that firms were able to obtain cover for high limits of indemnity.

The FCA says where it seen clear examples of non-compliance with rules – such as inadequate policy limits or exclusions which exclude all activity – it has raised this with the firms and ensured corrective action is taken.

In its report, the FCA said: "We also expect insurers and managing general agents that provide PII in this area to review their products in light of the findings in this report to ensure they are consistent with the needs of those intermediaries to whom they are providing cover – including meeting the requirement of MIPRU."