The FSA has been accused of wasting the protection industry’s time due to lack of clarity about how much of the RDR will apply to protection.
Defaqto insight analyst for life and protection Ben Heffer says since the regulator launched the RDR in June 2006, the extent to which it relates to life and protection sales has been unclear.
He says although the RDR is mainly concerned with distribution of investment products, it would have been dangerous to assume during consultation that proposals such as adviser-charging did not apply to pure protection products as well.
Heffer says: “The lack of clarity on this issue has resulted in much wasted time and effort as commentators, advisers and insurers planned ahead for potential changes.”
The FSA published a consultation paper in March proposing that adviser-charging will not apply to pure protection sales under the conduct of business sourcebook. A policy statement on the final rules for pure protection sales is expected in September.