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‘Exclusions pose danger for IFAs’

FSA called on to compel insurance policies to list all exclusions up-front

The FSA is inadvertently setting a trap for IFAs by encouraging insurers not to list all exclusions up front in policy documentation, says Scottish Widows protection marketing manager Nick Kirwan.

He says the FSA is failing to give proper guidance on what are deemed common-sense exclusions and allowing providers to determine their own wording.

The FSA issued guidance notes in December on key features documents for general insurance products, aimed at reducing small print. It said exclusions that were deemed as common sense did not need to be included but Kirwan points out that the regulator failed to give examples.

The regulator says it is intermediaries’ responsibility to mention any common-sense exclusions that do not normally have to be listed if they might be applicable to a particular client.

But Kirwan says this requires detailed knowledge of policy wordings from every insurance company, presenting a danger for IFAs. He says insurers should have to highlight exclusions up front.

Kirwan says: “This is a real trap for intermediaries. If they are using the key features document as an aide memoire and it fails to list certain exclusions deeming them common sense, it could come back to bite them.”

Jelf Private Clients director Charles Bailey says: “Because critical-illness insurance is so complicated and specific, it is important to have all the exclusions listed.”

FSA spokesman Robin Gordon-Walker says: “Our imminent thematic review of critical-illness insurance will look at exclusions but we will wait until those results come out before we comment on what the outcome might be.”

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