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Our arguments on the problems of non-advised sales have not been answered

The FSA’s latest treating customers fairly report shows that this column’s message that the non-advised purchase of protection causes real consumer detriment is getting through. Providers are urged to ensure that their distributors are able to show they are not selling inappropriate products to the wrong target markets.

Selling life cover to people with no dependants who do not yet have IP seems a good example of this to me. No non-adviser can show they do not do this routinely.

Sadly, our many arguments over the years are not being heard by those who profit from non-advice. None of them (email me at for a list) have ever been properly answered by any non-adviser. The only claims that non-advisers rely on in their defence are that many buyers know what they need and that it is wrong to ban any method of buying cover. They are wrong on the first and disingenuous on the second. We can prove that they are wrong in saying that only people who know what they are doing buy without advice because none of these buys FIB or IP. Which? quite rightly says most consumers should have this cover and good advisers wish that they could sell more.

The layman is not buying what they should and the activities of the huge non-advising brands make even advisers struggle to educate the sceptical. In addition, our experience of dealing with those who have second thoughts after a non-advised purchase and then ask us to review their decision reveals that over 70 per cent change something major (such as the type of cover, the term or the trust status) when they learn a bit more about their options.

To sell a product as complex as critical-illness cover without advice is damned near fraudulent but some of our biggest brands do.

As to the second point, there is no desire to close down non-advice, just a determination to see that its current failings do not drag our industry into the mire once again. Sell by all means but do so while making consumers aware of the key issues that they should consider.

To dramatically reduce someone’s ability to seek compensation from the ombudsman without telling them is just plain wrong. To sell someone PPI, MPPI or CI without checking that they would not be better off with IP is plain wrong. The fact that some advisers also do the latter is bad but not as bad, as the FOS will one day be able to help their customers. Customers of non-advisers have no such safety net.

Moving us all up to date, to sell someone PTA without assessing if they have an issue that might make it a poor choice is also plain wrong. Of course, professional advisers can work out very quickly whether an applicant falls into the rare categories that might be ill-served by PTA. We can do it by checking age and salary and the medical questions regarding intentions to travel and if we do miss a 35-year-old who is on £50,000 a year and has a £1.5m-plus pension pot and has opted for enhanced protection despite having no advisers, then the Ombudsman will make us pay – and quite rightly we will.

Rest assured, once you say you advise, you best not rely on small print to protect you from the ombudsman’s best intentions.

Non-advisers could easily check such points and this column suggested how last month. They laughed it off. Given the emotional and financial consequences at stake, it is about time we demanded that they take the issue of consumer detriment seriously.

Tom Baigrie is joint managing director of Baigrie Davies


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