The protection industry has laid part of the blame for dwindling income protection sales at the FSA’s door, saying it must robustly enforce Icob and treating customers fairly if business volumes are to rise.
The income protection taskforce, led by CWC Research partner Clive Waller and Le Beau Visage director Peter Le Beau, this week launched a White Paper outlining the economic importance of income protection and how it can be made more attractive to advisers and consumers.
The White Paper’s nine-point plan says: “Robust enforcement of Icob and the treating customers fairly principle would ensure that income protection sales multiplied exponentially overnight.
“Customers are not being treated fairly. We implore the regulators to act swiftly. Financial security depends on it.”
The taskforce believes that regulation should be enforced which requires all protection distributors to make potential customers aware that long-term income protection also exists and offer them a referral if they are not able to sell income protection.
It says income protection should be elevated to become the most important financial protection product over and above life, critical-illness and payment protection insurance.
The White Paper also calls on the Association of British Insurers to produce standardised industry definitions of the difference between short-term and long-term insurance.
Waller says: “Consumers are spending more in total on all the different bits of payment protection insurance they take out on their phone, car or computer than it would cost them to get total income protection. And the FSA are doing what? They are fining minor brokers for PPI misselling and ignoring the banks which are the biggest sellers.”
Which? principal researcher Teresa Fritz says: “At Which?, we believe the consequences of being sold the wrong protection product are just as serious as being sold the wrong investment product.”