Advice firms spent 17 per cent more on professional indemnity insurance premiums over 2019, FCA data shows.

This pushed the total spent on premiums from £94.4m in 2018 to £110.3m last year with premiums taking a greater percentage of revenue from all firm sizes.

The average premium paid by financial adviser firms went from 2 per cent of their average regulated revenue in 2018 to 2.3 per cent in 2019.

These figures are from the watchdog’s annual retail intermediary market data published today.

Advice firms in the £101,000 to £500,000 revenue band saw their premium as a percentage of revenue increase the most from 2.2 per cent to 2.8 per cent over 2019.

The FCA says while this represents an increase of 27 per cent, it does not represent a significant change in the burden it places on firms.

It adds these increases are likely to reflect the changes in the Financial Ombudsman Service award limit and claims experienced by the market.

The award limit increased from £150,000 to £350,000 on 1 April 2019, and the watchdog says its data goes up to 31 December 2019.

The bulletin also points out adviser firms generally paid a lower premium the larger the firm, the exception being those in the £501,000 to £10m revenue band.

There the average premium as a percentage of revenue was higher than the band below (see table below).