Cirencester Friendly Society is meeting with the FSA to discuss whether its income protection plan can be governed by Icob rules rather than Cob following the retail distribution review.
Chief executive Paul Hudson says the firm’s Holloway-style income protection plan currently falls under Cob rules because it offers the option to accumulate a cash lump sum paid out on death or maturity of the contract, so it is not a pure protection product.
But he says falling outside Icob could disadvantage the firm because adviser-charging will apply. He is meeting with the FSA next month to discuss his concerns and any “unintended consequences” of the RDR.
Hudson says: “The concern of Holloway contracts falling under Cob is that those who need the contracts might not be prepared to pay or be in a position to pay a fee and this could lead to consumer detriment.
“The effect of applying the feecharging structure to one part of the IP industry and not ano-ther will be to put the future of the Holloway sector at risk.”
Highclere Financial Services partner Alan Lakey says: “It would make perfect sense for all protection plans to be exempt from the RDR.”