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&#39Iron out protection problem&#39

Scottish Provident&#39s Nick Kirwan is calling for a “wrinkle” in proposed protection regulation to be ironed out.

He says the problem could mean advisers and clients having to use two different sets of regulation for the same product.

Kirwan, who is head of marketing and product development at ScotProv, says current regulations mean term insurance, income protection or critical-illness contracts that run over the age of 70 are treated as an investment product for regulation purposes while any lesser term is not regulated.

When the protection market becomes regulated in January 2005, contracts expiring under the age of 70 will also become regulated but as protection products, not investment, meaning they would be affected by two sets of regulations.

Kirwan is concerned this that will result in rises in the cost of insurance and reduction in consumer choice.

FSA spokeswoman Kate Bristowe says: “The issue comes back to the existing definition of pure protection products which has been set down by the Treasury for the protection of consumers and does not change with the incoming regulation.”

Kirwan says: “It would be such a small thing to change, let&#39s treat it all the same way. It is just going to annoy providers and IFAs could inadvertently use the wrong set of regulations.”

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