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FSA set for Icob changes

The FSA’s overhauling of the way non-advised protection sales are carried out under its proposed two-tier Icob regime marks a victory for Money Marketing’s No Advice No Protection campaign.

Money Marketing has been lobbying to make the non-advised sales process more robust for consumers and to ensure consumers understand that they have no redress to the Financial Ombudsman Service over any later complaints about the suitability of the product.

The Insurance Conduct of Business review interim report said: “There is some cause for concern over the issue of advised and non-advised sales, as our current rules mean consumers are not always aware of the implications of the type of purchase they make.

“This highlights the areas where Icob is not delivering on all aspects of the four intended consumer outcomes of the regime. Specifically, consumers may not receive enough information during non-advised sales to make an informed decision on whether term assurance is the right product to meet their protection needs.”

The FSA says firms undertaking sales that currently rely on written information and do not explain key information to consumers will have to change their procedures if the proposals go ahead. These will set out a new framework for the way that non-advised protection insurance is sold.

The FSA also states that entry into the sector by supermarkets has sparked debate about whether consumers are disadvantaged if protection is sold without advice.

But the regulator admits that even increased disclosure requirements would not fully solve the remaining problems “given that consumers often do not read the documents until after the sale”.

Royal Liver chartered insurer Mark Davies says: “We welcome the FSA’s review of Icob and in particular their acknowledgement of the importance and value of advice in protection sales. In particular, we hope to see reduced volume but more focused documentation given to customers, which should mean that people are more likely to read it which should in turn help increase customers understanding of the product they are buying.”

Lifesearch managing director Tom Baigrie says: “We are delighted that the FSA Icob review team has listened to the views of the industry and is looking to address the consumer detriment being caused in the personal protection market. Consumer campaigns promoting the value of advice have been influential in encouraging the regulator to reconsider the information made available to consumers when they buy insurance products.”


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