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Stakeholder waiver of premium rules &#39are a hornets&#39 nest&#39

The General Insurance Standards Council says rules forcing it to regulate IFAs on sales of waiver of premium for stakeholder are a “hornets&#39 nest of complication”.

IFAs must submit to two regulators if they sell waiver of premium with stakeholder after September. Advisers have been aware for a number of years that failure to offer waiver could result in lawsuits from policyholders. But by providing cover, IFAs face another increase in the burden of compliance and a £200 minimum fee from the GISC.

From April 5, waiver will become a general insurance product as it must be sold as a separate policy to stakeholder and as such falls under the jurisdiction of the GISC.

New rules require all pro-viders of general insurance products to deal exclusively with intermediaries who are also GISC members or have submitted applications from September 1.

Aifa director general Paul Smee has been lobbying the GISC to remove stakeholder waiver of premium from its sphere of responsibility and recognise that the product must be sold in a stakeholder environment.

The GISC says it is considering a nominal membership category for IFAs. Head of communications Catherine Nicoll says: “The situation is not resolved but we hope to reach a pragmatic solution. We do not want to impose more red tape and bureaucracy on IFAs.”

Smee says: “IFAs are at present perfectly adequately regulated by the FSA. Getting IFAs to register with two regulators is not sensible or pragmatic.”

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