The Association of British Insurers and the Chartered Insurance Institute say they are against the FSA’s proposal to ban non-advised sales of complex products.
The FSA published its discussion paper on product intervention in January. It proposed a ban on certain products being distributed through non-advised channels where they are particularly complicated or where there is a high risk of consumer detriment.
The consultation period ended on April 21.
In its response, published last week, the ABI says: “We are generally sceptical of proposals which effectively force consumers to spend money on advice that they do not require or wish to take.
“It may also exclude certain consumer groups from the market by making it more expen-sive and difficult for them to access products.”
The ABI adds that the FSA should not make any judgements on product intervention until the European debate on the definitions of complex and non-complex products has been resolved.
Mifid rules allow non-advised, or execution-only, sales in relation to non-complex financial instruments.
In its Mifid consultation paper, published in January, the European Commission proposed either changing the definition of what is a non-complex product or a blanket ban on non-advised sales.
The consultation closed in February and the final proposals are expected this spring.
The CII says its members are also against a ban on non-advised sales. Its response cites a survey carried out with 1,229 CII members and 742 PFS members.
It found that only 40 per cent of respondents believe the power to prevent non-advised sales would help improve consumer confidence.
The CII says: “In the vast majority of cases, misselling has resulted from management decisions to focus on particular products and to incentivise staff accordingly. These are both issues that can readily be dealt with inside the existing provisions.”
Thameside Wealth director Tom Kean says: “A ban on non-advised sales is patronising and unworkable. How do you decide how complex a product is?”