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Protection advisers playing regulation catch-up

Protection advisers are not prepared for regulation in January and must catch up with other sectors to avoid misselling, says Mortgage Portfolio Services mortgage planner Simon Chalk.

He says mortgage intermediaries, traditionally perceived as operating within a low-risk area of financial services, have had the benefit of the MCCB to prepare for mortgage regulation.

Having a voluntary code since April 1998 made the mortgage industry better prepared for compulsory regulation, says Chalk. But protection advisers have not had the same background and regulation may come as a shock to them, he warns.

Protection policies sold on the back of a mortgage sale, typically a decreasing-term insurance are a particular cause for concern he says.

Intermediaries must ensure that people with existing life policies should make sure their cover is extended to match the term and premium of the new mortgage.

Scottish Widows marketing director, protection Nick Kirwan says the demands and needs’ statement should indicate to the client to review insurance needs if there are any changes in the circumstances of the client – such as moving house or getting married. This currently is not a regulatory requirement.

Chalk says: “We should be aware that there is a greater potential for complaints on general insurance contracts from Jan- uary. Advisers should make clients aware of the changes that are entailed in remortgaging.”

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