The revolt is spearheaded by the IFA Association, the advisers' trade body, which said yesterday it was talking to lawyers to check whether an emergency meeting could be called.
An IFA Association spokesman said: "We believe the PIA is abandoning plans to regulate the sale of long-term care plans in order to appease the banks and their insurance subsidiaries, who sell uncompetitive products. This is the pay-off they are demanding for joining the PIA in the first place."
The row between advisers and the PIA follows the regulator's decision to abandon rules it planned to introduce to regulate sales of long-term care policies, predicted to reach up to pounds 10bn a year within the next decade. The PIA argues that it is waiting to hear of the outcome of discussions between Stephen Dorrell, the health minister, and the Treasury over tax concessions for the plans. Until then, Mr Dorrell has shelved his own proposals.
However, advisers believe the PIA's move comes because if it were to regulate these new products, it would have to do so under polarisation rules. Polarisation ensures advisers either declare themselves independent and able to recommend any product, or they must sell the policies of a single company.
Some banks and insurance companies want to be allowed to sell "badged" products from other firms, thus breaching the rules which prevent them from recommending just their own.
The IFA Association's motion aims to ensure regulation is applied and that it is carried out under polarisation rules.
A PIA spokesman said the regulator had no intention of dismantling polarisation.Reuse content