The PIA's new rules look set to face a bitter legal challenge by disgruntled IFAs, who argue that they will be forced out of business as a result.
Garry Heath, chief executive of the IFA Association, the advisers' trade body, said last night: "Our lawyers will be studying the rules line by line. If they really are as bad as they seem then we will be applying to the High Court for a restraining order to stop them from being implemented."
The guidelines, now part of the PIA's rulebook, also aim to plug loopholes used by some IFAs and insurers to wriggle out of meeting victims' claims.
Among the let-out clauses no longer allowed will be that of "execution- only" disclaimers, where salesmen have claimed they did not advise clients but only carried out instructions.
Some IFAs are believed to have asked scores of clients to sign disclaimer forms. Prudential, Britain's largest insurer, has also been accused of similar activities when carrying out personal transfers.
The PIA said yesterday: "Some firms have relied upon standard forms and disclaimers in circumstances where this was not warranted. No firm should rely on this kind of evidence unless it [has] first satisfied PIA that there are no circumstances which would cast doubt upon the accuracy of the assertion in any such document that the document was carried out on an execution-only basis."
Prudential has refused to join the PIA, arguing in favour of statutory regulation instead.