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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