This compares to premiums paid of 2% of average regulated revenue in 2018.

The total spent on professional indemnity insurance (PII) premiums by Financial Planners increased by 17% from £94.4m to £110.3m.

Financial Planners with revenue between £101,000 and £500,000 saw the largest rise with premiums as a percentage of revenue increasing to 2.8% in 2019 (from 2.2% in 2018).

Firms with a revenue of below £100,000 paid the highest premiums in relation to revenue. Their PI premiums were an average of 4.4% of regulated revenue with an average premium of £2,580 per firm.

Financial Planners were profitable as 94% of firms reported making a profit in 2019. However, profits fell in 2019 with total pre-tax profits down 7% to £808m (from £872m in 2018).

Pre-tax profit as a proportion of revenue declined with the size of the firm. Firms with just one adviser showed the highest profit margin with an average pre-tax profit of 43%.

Small firms remain a significant part of the intermediary sector. Nearly 9 in 10 Financial Planners and mortgage broker firms had 5 or fewer adviser staff.

The total number of adviser posts at financial adviser firms increased by 3% in 2019 to 27,557, the majority of the increase was accounted for by the larger firms.

In the FCA report, firms providing retail investment advice reported that revenue from initial advice charges has decreased by £273m (-14%) to £1.67bn, while revenue from ongoing charges has increased £529m (16%) to £3.89bn.