Wheatcroft, who is principal author of insurance report Term and Health Watch, says the terms of reference included in the RDR were written with investment in mind and protection should not be “lumped” in with it.
He says: “It would be dangerous to apply the methodology and thinking people are using for the RDR on investment products in the protection field. It needs to reflect the reality of the market.”
Wheatcroft is urging the financial sector to look at the impact some of the RDR conclusions may have on the protection business, particularly those firms who advise across different products, and seek clarification around what independent advice means.
He says: “There is this debate about the meaning of independent advice in regulatory terms. At the moment, there are three meanings – one in investment, one in protection and one in mortgages.
“If there is a new definition of advice, perhaps around a fee-based model, then if that is not a model we use in the protection market, we need to think through how that might be impacted.”
Wheatcroft fears that coining a definition on advice could be a step back.
He says: “Advice is advice and the quality of the adviser should be just as good. If we try to hang a definition on advice, we will end up back in the same debate 20 years ago about what advice means.”