Last month the FSA, the Association of British Insurers and a number of associated working groups met to discuss the likelihood of banning commission on pure protection sales as part of the RDR.
The regulator is understood to have told the meeting that it struggled to see how advisers could have product bias when selling protection and therefore commission is likely to stay under insurance conduct of business rules.
In its RDR consultation paper earlier this year, the FSA asked what consumer detriment, if any, would arise if it implemented the RDR proposals for the sale of retail investment products and took no action on regulating the sale of pure protection products under Icob.
The ABI declined to comment on the meeting but assistant director of health and protection Nick Kirwan says: “The industry is completely united in feeling that people will be very reluctant to pay any sort of fee for protection advice.”
Bill Warren Compliance managing director Bill Warren says operating under two remuneration models is “messy” and could cause potential conflict.
But he adds: “The bottom line is that commission from protection is fairly minuscule so not too many advisers are going to be that concerned about trying to take advantage of the commission situation.”
The FSA declined to comment on the meeting but a spokesman says: “We are looking at potential read-across of the RDR and we are planning to feedback our thoughts on this by the end of the first quarter next year.”