In their latest review, the Financial Services Authority has refused to increase the maximum compensation that the Financial Ombudsman Service and the Financial Services Compensation Scheme can award customers.
Consumer groups were calling for the maximum limits for awards to be increased from £100,000 to £200,000. Some people within the financial services industry have said that the £100,000 limit, which was introduced in 1981, is outdated, while others say that an increase would cause professional indemnity insurance to escalate for advisers.
The Association of Independent Financial Advisers has welcomed the news, but believes that the Financial Services Compensation Schemes' limits for insurance claims, which will remain unlimited, should be capped.
Our view
Given that the solicitors compensation award has just been increased to a paltry £15,000. £100,000 compensation runlings by the Ombudsman for Financial Services plus advisers having a minimum required professional indemnity insurance cover of €1.5m (c£1m), we believe this gives investors more than adequate protection.