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RDR will not apply to all Holloway policies

The FSA is proposing to exempt some Holloway Friendly Society sickness policies from the retail distribution review despite the inclusion of an investment element.

It says the RDR’s rules on professionalism and adviser-charging should not apply to advice on some of the policies, which combine income protection insurance with a small investment.

The FSA’s latest quarterly consultation, published last week, says: “We are proposing an exemption for those Holloway policies with a small investment element. Following discussions with the Association of Financial Mutuals, we are consulting on a threshold where the projected maturity value contained in the key features illustration is 20 per cent or less of accumulated premiums, using the mid-rate projection of the Holloway provider.”
The regulator has asked for feedback to be submitted before March 6, 2011.

AFM chief executive Martin Shaw believes the proposals do not go far enough. He says: “The FSA’s proposal to exempt some Holloway products from the RDR is a welcome, albeit rather limited concession.”

Plan Money director Peter Chadborn says: “Most people take out Holloway policies for protection and the savings element is an added attraction, so the FSA’s decision is right.”

The FSA is also proposing to add further qualifications to its recognised list for advisers under the RDR.

The qualifications relate to advising on packaged products and friendly society tax-exempt policies and managing investments or acting as a broker fund adviser.
They include the diploma in investment planning offered by the Chartered Institute of Bankers in Scotland, which is examined in a work-based assessment.

The regulator has requested responses by February 6 on the additional qualification plans.

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