FCA confirms changes to PII rules following FSCS funding review

As part of the the FCA's review of FSCS funding, the regulator raised concerns that PII providers sometimes try to limit their liability by preventing the FSCS from making a claim on a PII policy. This could be by including a specific clause to exclude the FSCS as a valid claimant or by having a more general insolvency clause which excludes claims where the firm is insolvent.

To address this issue the FCA proposed introducing a rule to ensure that personal investment firms (PIFs) only have PII policies that don't limit claims where the policyholder or a relevant third party is insolvent, or where someone other than the firm (such as the FSCS) is entitled to make a claim on the policy.

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