I was interested to read in the JFSC press release as shown here: http://bit.ly/2mWf9p0, and in particular the following statement;

• As Jersey does not have a financial services compensation scheme (other than for Bank Deposits), the JFSC is keen to stress to Industry that adequate PII cover is essential for protecting clients as well as the firms themselves.

To consider this statement, one must consider both FSCS and PII in the round.

Financial Services Compensation Scheme (FSCS):

• The aim of a financial services compensation scheme protects consumers when financial services firms fail [or go bust]. It is the compensation scheme for customers of UK authorised financial services firms.

Professional Indemnity Insurance (PII) (also known as Professional liability insurance (PLI) / errors & omissions (E&O)):

• PII is a form of liability insurance that helps protect professional advice- and service-providing individuals and companies from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in such a civil lawsuit.

• The coverage focuses on alleged failure to perform on the part of, financial loss caused by, and error or omission in the service or product sold by the policyholder. These are causes for legal action that would not be covered by a more general liability insurance policy which addresses more direct forms of harm.

• Professional liability coverage sometimes also provides for the defense costs, including when the legal action turns out to be groundless. Coverage does not include criminal prosecution, nor a wide range of potential liabilities under civil law that are not enumerated in the policy, but which may be subject to other forms of insurance.

• Professional liability insurance is required by law in some areas for certain kinds of professional practice (especially medical and legal) and is also sometimes required under contract by other businesses that are the beneficiaries of the advice or service.

AS can be seen, they are very different:

• a Financial Services Compensation Scheme is very different from a Professional Indemnity Insurance (PII), and
• although a client may take comfort that insurance covers an error and or omission the investing public should not think (or be directed to think) that PII is a panacea for all failures within a JFSC regulated firm.

SO SHOULD the FSCS and PII be in the same sentence?  Answers on a postcard, please….