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Clerical sees end of boom in non-regulated products

The boom in IFA sales of non-regulated products will come to an end when regulation of protection and mortgages comes into force next year, Clerical Medical has warned.

Head of sales Graeme Riddoch, speaking at Bankhall&#39s 10th anniversary conference in Barcelona last week, said he believed regulation would increase the cost of these products but would also squeeze procuration fees on mortgages and commission on protection products.

Riddoch told Bankhall delegates that he believes IFAs will return to selling traditional products such as pensions in greater numbers following regulation.

Riddoch said: “Non-regulated products are only a short-term opportunity for IFAs. Once they become regulated, procuration and fees will be squeezed and they will become far less attractive.”

But Bankhall joint chief executive Paul Hogarth said regulation would give IFAs an opportunity because many non-regulated brokers would be unwilling or unprepared for the move to a regulated environment. He said IFAs already operating in a regulated environment would be able to take advantage of a “massive” gap in the market for these products.

Hogarth said: “Products that have not been regulated up until now represent a huge market for our members. It is a massive gap. While these types of products will eventually come under a lightertouch regime of regulation, advisers who are used to the regulated environment will be able to work more effectively within that structure.”

Bankhall members speaking from the conference floor warned the FSA that it faced being inundated with applications from currently unregulated general insurance brokers in a rush to get registered before regulation.

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