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Providers and advisers have cover cost duty

The FSA says both protection advisers and providers are responsible for complying with rules that require clients to be told the full cost of cover over the term of the policy.

The rules on total premium disclosure first emerged in 2009 and stem from a clause in the European distance marketing directive calling for the disclosure of the “total price” of cover. The FSA interpreted this to mean the price paid over the cover term. The regulator announced in March that all firms which sell life, critical-illness and income protection policies under Icobs have to comply with these rules by the end of this year.

It was understood that providers would be responsible for total disclosure as they produce the illustrations but just four months from the deadline, the FSA has clarified that responsibility for disclosure lies with both advisers and providers.

A spokesman says: “The rule applies to whoever is providing the information to the consumer at the point of sale, so an intermediary where relevant or the insurer where the sale is direct.”

Lifesearch managing director Tom Baigrie (pictured) says: “I am at a loss as to how this will improve consumer outcomes. I certainly think IFAs and other distributors will be shocked by this new additional requirement and I think the FSA should explain its purpose better.”


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There are 6 comments at the moment, we would love to hear your opinion too.

  1. Can anybody explain to me why this is considered necessary?

    Will motor insurers have to indicate how much someone will have to pay for car insurance over their lifetime?

    Society is in dire need to regulatory balance, I see less each day!

  2. A perfect excuse for all insurers to provide a free pocket calculator with each illustration.

    What a wonderful industry.

  3. Couple of thoughts

    How is this going to work for indexed policies when the insurers don’t even know what their definitions of indexation are going to be post Sept 2010 – I’ve been trying to confirm this with one insurer for over 2 months.

    Second, now that they’ve killed off pensions they are now going to kill off protection and no one will have savings or protection.

    Great idea!

  4. Its a shame that the ABI did not take a far stronger position on this rather than turn over and have their tummy tickled whilst putting it on the too difficlut pile.

    What does the protection committee do?

  5. Once again the box tickers in Canary Wharf and in Europe strike.

    And how will this help improve the protection gap?

  6. They (FSA) haven’t got a clue… come every one & their dog can see this is a pointless exercise!! Instead of putting resource towards monitoring this rubbish, why not put it towards something with substance I.e. the mis-selling of products by the banks + handling the thousands of complaints the banks receive on a daily basis.
    I know this will never happen however as an earlier comment stated, just seems that the idiots at the regulator are just encouraging a nation to have mo pensions or protection!!!!!

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