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Health warning on IDD to say what no advice means

I wish to offer my support to the Money Marketing No Advice, No Protection campaign. We believe that distributors which sell protection without giving advice and/ or without offering a full product range should make it clear to the consumer the limitations of their service and the rights the consumer is giving up.

The FSA has introduced the Initial Disclosure Document, which seeks to educate the consumer about the status of the salesperson they are dealing with. However, the focus of this document is too much at the provider level and does not deal with the equally impor-tant aspects at product and advice level. There should be health warnings on the IDD to make it clear exactly what buying without advice and/or from a restricted product range means in terms of suitability and con- sumer protection.

For example, section 2 of the IDD covers WOM, multi-tie and single-tie at the provider level. However, nothing explains if the product range within that is also limited. A further section should explain if the product range is representative of the whole market of products available or a limited panel. In other words:

  • We provide a broad range of products to help meet all your needs. OR
  • We provide a narrow range of products, which means there are products available elsewhere which might be more suitable for your needs.

Further, section 3, Which service will we provide you with?, should be expanded to clearly explain to the client that if they are not taking advice (second tick box), then they lose the protection of the Financial Ombudsman Service and the FSCS in the event that they buy an unsuitable product.

Under COB rules, any business sold without advice has to be covered by an execution-only declaration and we see no reason why this should be any different for those operating under ICOB rules. Essentially, this declaration should clearly itemise the areas listed below and be read or displayed to the client before they buy:

  • No advice has been given on the suitability or otherwise of the product being bought.
  • The salesman cannot be found liable if it is later found the pro-duct taken up is not suitable.
  • If you ever discover that the product was not suitable for your requirements, you will not be able to claim redress from the FOS, which can enforce decisions in your favour of up to 100,000, or the Financial Services Compensation Scheme, which can award unlimited financial compensation.
  • There are products available from elsewhere which might be more suitable to your requirements.


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