Lifesearch has launched a protection seller’s code of conduct which aims to tackle the “most obvious current failings” in protection distribution so customers are not put at risk.
It unveiled the code at its ninth annual protection awards in London last week. It calls on firms to explain to customers the limitations of critical-illness cover, such as when the policy will pay out and when it will not. For example, where a plan will pay out for some forms of cancers but not for others.
The code says advisers who highlight terminal-illness benefit as a product feature must state its limitations, such as not normally paying out in the final years of a life policy, and ensure it is not confused with critical illness cover.
It says advisers should explain the definition of disability on which total and permanent disability cover and income protection policies will pay out, for example own occupation or activities of daily living.
Those selling payment protection insurance or accident, sickness and unemployment cover must make any exclusions clear and must mention income protection as a viable alternative.
The code says advisers must clearly state if they are providing regulated advice or not and all sellers must demonstrate to their insurers they have properly provided for the repayment of indemnity commission on lapsing policies.
Lifesearch chief executive Tom Baigrie says: “We drafted a short and basic code of conduct for protection sellers so as to promote the take-up of protection by clearing up areas of consumer confusion and supply-side failings. The aim is to give consumers the best chance of getting a fair deal no matter how or from whom they get protection.”
Master Adviser senior partner Roy McLoughlin says: “I totally support this code. It might be difficult to operate initially, because it is a self-regulatory regime but I hope the market adopts it as it is a great initiative.”