Or so says the Financial Ombudsman Service which has thrown a mini spanner in the advice works by suggesting that a nod during the non-advised sale of a protection product could constitute advice.
The lead ombudsman for insurance Peter Hinchliffe admitted there was confusion among customers over what does and does not constitute advice in the protection market.
He says customers often ask questions which relate to the suitability of a policy when buying through direct sales channels and a nod or “yes” answer from the seller could be considered to be advice.
This leaves direct sellers in a bit of a quandary. If something as simple as a nod could be interpreted by the customer as advice then direct sellers will have to tread carefully and ensure customers understand that these channels cannot advise them on the suitability of any product.
In Hinchliffe’s view, it is a shame if direct firms do not offer the customer the choice to take advice and he suggests that sales staff should be trained to offer both non-advised and advised sales.
But the evidence needed to prove whether the customer thought they had received advice is another and trickier matter. It would be almost impossible to prove that a seller had nodded two years ago at an appropriate point in the conversation which has suggested to the customer that they should buy a particular policy.
Nevertheless, direct sales channels must be aware that customers may want recommendations and could read meaning into answers to certain questions as a result. This may lead a customer to the conclusion that they have been swayed to choose a particular product.
But Hinchliffe points out that only a small percentage of claims to FOS are submitted surrounding the suitability of the policy and the customer still has recourse to complain about any policy failures.
The FOS stresses that direct sellers should not be unduly worried by this latest clarification on advice.
But when training sales staff, they should be careful to emphasise that sellers must tell the consumer to seek advice if they start asking questions about suitability.
What’s in a nod? Potentially, the difference between advised and non-advised sales with a pinch of customer confusion thrown into the mix.