On the FSA’s concern that the RDR could push more advisers towards protection as a way of continuing to receive commission
How many other advisers have come across new clients where they have so much life cover that it actually causes them an IHT problem, or partners in a business where the adviser has sorted out the cover but not bothered with the Trust wordings, option agreements etc.
Yvonne Goodwin, Yvonne Goodwin Wealth Management
Yes, there need to be more clients covered and closing the protection gap is a good thing but only if it is done right. Advisers switching from mortgages to buy to let to circumvent regulation was a bad thing given the current climate and the number of repossessions I see of amateur buy-to-let landlords sold a product and given no advice. The FSA should create a level playing field and adviser charges should be for all or for none.
Stephen Yates, Financial Fusion
Overselling protection? Why is there a protection gap then? If the FSA go for a fee-based approach to protection, then the gap will rocket. The vast majority of people will not go for cover if faced with a £400 bill to arrange it. Of course the banks and insurers will love it, their profit is in the rates so they will just say fine thanks.
I agree with Yvonne’s point about how many people are sold the protection with none of the important bits to go with it, that is, the IHT and trusts to do it properly. You don’t miss those things out when you advise as if you do that’s your PI premiums through the roof and you are probably out of business very quickly as a result. It is those that sell rather than advise(don’t need PI then do you) that are the problem.
Nothing wrong with earning for the advice you give and with pure protection if the FSA want to get rid of commission, they will need to replace it with a viable factoring alternative as advice costs money, but can save massively more than it costs if done correctly for the client.
Phil Castle, Financial Escape
One of the supposed aims of the RDR was to rid the business of provider and/or product bias. Recent surveys have shown that the majority of advisers sell the cheapest product even though industry experts opt for best value products. If we accept this as being the case the potential for bias does not exist. Clients do not buy more protection than they need and one of the sad inferences of the RDR proposals is that they are so thick that they can be manipulated by wicked advisers. This viewpoint is not only incorrect but dangerous as it sets up the industry for yet more needless regulation.
Alan Lakey, Highclere Financial Services