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.”