FSA urged to clarify cover disclosure
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Association of British Insurers’ protection strategy committee chairman Richard Verdin is calling for greater clarification of the FSA’s requirements for commission disclosure on protection sold alongside investment advice.
Verdin, who is protection director at Aviva, says clarity is needed on the requirement to disclose commission where pure protection is sold under Icobs alongside investments.
The FSA’s retail distribution review paper says there is “a case for requiring commission disclosure where pure protection is sold under Icobs alongside investments”.
Verdin says: “The FSA needs to define ’alongside’. Is it when protection is sold by the same person, by a different person or at the same time?
“The other question you have to ask is how would the insurer providing the illustration know whether you are selling protection alongside an investment product?”
Verdin adds that to monitor which polices are written alongside investment advice would be costly as it would require multiple technology systems.
Money Marketing understands the ABI is expected to outline its concerns over this issue and the use of two rulebooks for writing protection business when it responds to December’s RDR paper. The FSA is developing its proposals on commission disclosure and intends to consult at the end of March on draft rules.
Bupa Income Protection head of product development Steve Casey says: “My preference would be to have the same rule for Cobs and Icobs.”
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Readers' comments (1)
Anonymous | 17 Feb 2010 6:49 pm
All the fuss and expense on commission disclosure over the years, including an in crease in commissions to pay for the extra work (at policyholders' expense) and it hasn't made a damned bit of difference to how the customer buys, in spite of what the so-called consumer champions say the customer wants.
Now we even have to discuss which policies and how we do it.
Our industry REALLY knows how to shoot itself in the foot!
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