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Watchdog says a nod is giving advice

The Financial Ombudsman Service has warned that something as simple as a nod could be construed as advice during the non-advised sale of a protection product.

Lead ombudsman for insurance Peter Hinchliffe says customers often ask questions which relate to the suitability of a policy when buying through a direct sales channel and a nod or a “yes” answer from the seller could constitute advice.

He says there is a lot of confusion over what does and does not constitute advice in the insurance market but says if there is evidence that direct sellers are offering advice on the suitability of products, they should stand behind the advice they have given.

He also says firms that only offer a direct-sales channel should consider whether to train their sales staff to be able to offer advice if the consumer wants it. Hinchliffe says: “Just because the seller says the sale is non-advised does not mean it is non-advised. A nod at a certain point in the conversation could be considered as advice.”

Baigrie Davies joint managing director Tom Baigrie says: “In the light of treat- ing customers fairly, non-advised sellers should be considering whether to provide an advised option and should be careful to make sure the customer is clear on whether or not they have received advice.”

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