Lifesearch head of protection strategy Kevin Carr is calling for pure protection business to be “ringfenced” from the retail distribution review.
He says: “Protection should be ringfenced. The FSA’s two areas of concern do not apply to protection. With protection there is no investment growth so there is no consumer detriment and there is no product bias because commission is the same across all products, it is driven by the premium.”
Carr says consumers will not pay fees for protection products unless they are spread over the term of the policy and advisers would be forced to charge higher fees to clients in poor health as their cases will require more work. He says: “At what point does this become discrimination? Commission works in this situation because if the premium is loaded the commission goes up and the adviser is paid for the extra work.”
But compliance consultant Adam Samuel says: “Different types of products do attract different commission and to exempt little bits and pieces is incoherent.”