The FSA is proposing to exempt certain Holloway sickness policies from the Retail Distribution Review, as part of its latest quarterly consultation issued today.
The regulator says the RDR’s rules on professionalism and adviser charging should not apply to advice on some of the policies, which combine income protection insurance with an investment element.
The consultation says: “We are proposing an exemption for those Holloway policies with a small investment element.
“Following discussions with the Association of Financial Mutuals, we are consulting on a threshold where the projected maturity value contained in the key features illustration is 20 per cent or less of accumulated premiums, using the mid-rate projection of the Holloway provider.”
The regulator has asked for feedback to be submitted before March 6, 2011.
Elsewhere the FSA is also proposing to add further qualifications to its recognised list for advisers under the Retail Distribution Review.
The qualifications relate to two RDR activities, advising on packaged products and friendly society tax-exempt policies, and managing investments or acting as a broker fund adviser.
They include the diploma in investment planning offered by the Chartered Institute of Bankers in Scotland, which is examined in a work-based assessment format.
Association of Financial Mutuals chief executive Martin Shaw suggests the FSA has not gone far enough. He says: “Holloway policies are typically sold as income protection style policies with additional features that make them excellent value for money, particularly for the self employed or low earners, who are generally poorly served by insurance companies.
“The FSA’s proposal to exempt some Holloway products from the RDR is a welcome albeit a rather limited concession. It would mean that post-RDR an independent adviser would be able to compare Holloways on equal terms with other forms if income protection. For these products at least FSA recognises that adviser charging would be a barrier to fair competition.”