Research by the regulator found some firms’ interpretation of total premium to be inconsistent with the FSA’s requirement, leaving consumers unable to “make an informed decision” when purchasing a policy.
As a result, the FSA is now providing further clarification of the ICOB requirement to disclose total premium for MPPI and other general insurance and protection products.
A statement from the FSA says: “In our view the disclosure of total premium will be necessary to put the customer in a position to make an informed decision. The disclosure of the monthly premium alone is not sufficient to enable consumers to make an informed decision.
“We do not accept that it is safe to assume that consumers can readily grasp from a statement of monthly premium alone the nature of the overall financial commitment proposed. We consider that the sales discussion is not balanced if consumers are only given the monthly premium to weigh up against the information the firm gives on the benefits of the product, which consumers are asked to relate to protecting a loan that covers a much longer period of time.”