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Icob firms should sell PTA without advice

Direct Life & Pensions sales and marketing director Richard Verdin says Icob advisers should sell pension term assurance without advice rather than with a caveat which says they cannot advise on the suitability of the product.

Verdin says he knows of specialist protection advisers that do not sell PTA because they are uncomfortable with the risk of invalidating someone’s enhanced protection.

He says some Icob advisers do not hold basic qualifications and therefore may not be aware of the impact that a PTA policy could have on a client’s pension arrangements.

Verdin says: “The right thing for Icob businesses to do is to offer PTA only on the basis that the sale is non-advised and declared as such on the initial disclosure document. That way, there can be no doubt who is making the decision about suitability.”

Icob advisers are not regulated to give advice on the suitability of a PTA product because it is regulated under Cob pension rules.

CBK principal Peter Chadborn says: “Clients should be made aware of the disadvantages of taking advice from an Icob adviser. It should be made obvious at the beginning that there are certain other areas of financial planning that PTA may affect.”

Torquil Clark Life Insurance director Jason King says: “There is a treating customers fairly issue here. Firms need to demonstrate that they have systems in place to catch the 1 per cent of the population for whom PTA would not be appropriate.”

The Financial Ombudsman Service spokeswoman Emma Parker says consumers may not have recourse to compensation if the policy later turns out to be unsuitable because the consumer technically did not get advice on the product’s suitability.

Comment, p44


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