Industry experts fear the long-term care market will die out as FSA rules compel people already advising on the product to take an exam to prove their competence.
The rules were published this week and come into force on October 31 when LTC comes within the scope of the FSA. They stipulate that all advisers, including those who are currently competent to advise on LTC, will need to pass an exam within two years of regulation.
Experts predict that advisers will continue until regulation starts and either fold up their practices or focus on areas with less onerous training and competence requirements.
Income protection or critical-illness policies that offer the option of converting into an LTC policy have been made more difficult by the rules. Abbey for Intermediaries head of marketing Nick Kirwan says the option is effectively being taken away from consumers.
Bright Grey product director Roger Edwards says: “The LTC market is no longer going to exist. Advisers will be asking themselves whether it is worth their time to become regulated. The rules have effectively reduced consumer choice.”
FSA spokeswoman Jackie Blyth says: “Advisers will be grandfathered in over the next two years. Our aim is to enhance consumer protection.”