The FSA is warning advisers not to overlook the ongoing advice needs of with-profits clients.
The regulator has published a briefing note following its thematic investigation, which found some advisers are failing to treat customers fairly because they do not provide sufficient ongoing help on with-profits.
Director and insurance sector leader Sarah Wilson says the FSA and providers need to help advisers by providing clearer guidance and information.
The FSA says there are 32 million with-profits policies in force but many investors no longer have access to the advisers who sold their policy. Even where policyholders do have an adviser, it says many are reluctant to advise on with-profits.
It says many clients are forced to rely on post-sale marketing literature from providers which often fails to explain guaranteed annuity rates or dates when they can take proceeds free of a market value reduction. Some literature uses complex jargon and does not explain how the insurer’s actions might affect the policyholder.
Wilson says without ongoing advice, customers might not be able to make properly informed decisions about their policy and whether they should take action.
The FSA has published a second briefing note for providers insisting on greater consistency of standards across their after-sales communication. It says these are of variable quality and this criticism holds for other product types as well.
Wilson says: “Senior management in insurers and advisory firms need to re-examine their approach and where necessary implement changes.”
Master Adviser principal Doug Brodie says: “The lack of transparency of these products meant advisers quite rightly became reticent, simply because of the lack of factual information. This is a very welcome move by the FSA about how the position can be resolved for the consumer and the adviser.”