The Association of British Insurers has announced proposals for a simplified advice process delivered via an automated, process-driven solution for consumers not willing to pay for advice.
Speaking at the Money Marketing RDR Invitational last week, ABI director of life and savings Peter Jolly said the service will cover four key needs.
He said: “These include a cash payment on the death of a key family member or replacement income in the event the financial provider is unable to work – simple term assurance and income protection.
“The second is saving for a life event. We are looking at regular premium and single premium Isas and other similar products.”
Jolly said the third key area is whether to enrol in a company pension scheme. He said: “Currently that market is served by full advice under the RDR proposals. But even in today’s market there are some areas where those who join a company pension do not get access to suitable advice in a simplified format.
“Perhaps most importantly, the provision of income in retirement. This is a key need that is not addressed for all consumers by existing advice. There is no simple solution for small pots or multiple small pots when consumers reach retirement.”
Jolly said the service must be delivered face to face, by phone or via the internet and the whole process should take between 35 and 40 minutes.
The ABI tested its proposals with a group of consumers and 83 per cent rated the experience as very good or quite good.
Jolly said: “The mock process generated good or fair outcomes for more than 90 per cent of respondents. More than 60 per cent agreed it made financial services more accessible.”
He said there are a number of obstacles to overcome before such a service can be brought to the market, including remuneration and qualification requirements, as well as the FSA and Financial Ombudsman’s handling of the process.
Jolly said: “The uncertainty around how the FSA supervisors, in particular, and the FOS would judge such a service are particularly key.”