FSA to review quality of brokers' protection sales
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The Financial Services Authority has published its Retail Distribution Review today in which it reveals it is to review the sales standards of pure protection products by mortgage intermediaries.
The FSA says its is concerned that the movement of intermediaries into product areas where they have little or no experience could give rise to conduct risks.
It says: “As a result, we will be reviewing the sales standards of pure protection products by mortgage intermediaries.”
In its consultation paper on pure protection the FSA says it does not see a case for introducing adviser charging to pure protection sales.
But it does say for a firm that has both investment advisers and mortgage brokers who do not give investment advice, mortgage brokers could be obliged to disclose commission on any pure protection sale because the rule applies to the firm not the adviser.
The FSA’s RDR outlines new rules that will remove commission bias from the sale of retail investment products.
From the end of 2012, firms in the investment market will have to be upfront about how much they charge for their services, and no longer hide the cost of their advice behind the cost of a product.
In addition, firms will not be able to accept commission in return for recommending specific products
The changes also mean firms offering independent advice will have to demonstrate that their recommendations are based on a comprehensive and unbiased analysis of the market, and that any product selection is made in their clients’ best interests.
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Readers' comments (14)
Anonymous | 26 Mar 2010 12:50 pm
My question is, 'are they going to look at the sales by the banks as well?'
I have just received information through from my client regarding what his bank sold him 5 years ago and the cover is truly shocking.
Reviewable premiums, decreasing term cover and income protection that will provide 18% of his annual income (only enough to cover the mortgage payment and no more) and a length of cover that finishes too early.
Are they going to look at them or once again are we going to be victimised while the banks seemingly get away with it?
If they want to get tough on this type of sale, make sure it is across the board.
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Anonymous | 26 Mar 2010 12:59 pm
I could not agree more, the Banks have been mis-selling protetion policies for years, and are still getting away with it!!!but as usual, no mention of investigation there...
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BC | 26 Mar 2010 1:03 pm
Ditto to Bank sales, at annual review recently Bank 'advised' my client that he could save money on his JLSD WOL for IHT by getting the surrender value on the one he has had for the last ten years and taking out one of theirs on a maximum cover basis. I suppose that is fine if you are confident of dying in the next yeasr (at 60?). I have had enough of this incompetent shower of idiots who seem happy to acknowledge that everything is so imperfect even after 25 years of regulation. By the way, who pays for this 'review'? oh yes, poor old consumer in the end, and will they benefit whilst banks and others are still peddling inappropriate and expensive products?
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Anonymous | 26 Mar 2010 1:21 pm
Why should the FSA pick on the Banks?
After all they are able to defend themselves!!!
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Anonymous | 26 Mar 2010 1:23 pm
Talk about kick a man when hes down.....
Banks have been selling level-term instead of decreasing term policies for years cus it earns more commision,any news of them being investigated???
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Anonymous | 26 Mar 2010 1:45 pm
What else can the fsa review, i think every year they just sit down and work out , what can we look at this year too keep us in a job, leave the ifa,s alone it,s the bank that get the most compliants. I read in the pinks that the fsa were looking at taking on another 400 plus new staff, now we know why, but who is going to pay for all these extra staff, yes you guessed it , us the ifa,s when our fees will go up next year.
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bobby | 26 Mar 2010 1:58 pm
This is incredible. The FSA is their recent report noted at how hard the mortgage broker had been hit and their plummetting income. Now because of this they are now investigating other areas brokers have had to move into in order to survive. Not a thought about how to produce a level playing field so independant mortgage brokers could compete. Now it must be crystal clear to everyone the FSA's agenda which is the total and complete obliteration of the intermediary market. The Banks are by far the worst culprits of mis selling in this area but they are not even mentioned. I think this is the final straw. After over 2 years battle I have no fight left anymore. I am looking at other careers or may just go and work for a Bank as it would be like shooting ducks in a barrel. Surely people have had enough now.
You win FSA I give up.
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Anonymous | 26 Mar 2010 2:33 pm
If it ain't broke...
...the FSA will find a way to kn*cker it!
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bobby | 26 Mar 2010 2:52 pm
FSA
1. The obliteration of individuals saving for the future - check
2. The obliteration of people arranging pensions for their retirement - check
3. The obliteration of people getting independant mortgage advice - check
What next ?.
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mic2002 | 26 Mar 2010 3:24 pm
Whats the point in reviewing advised sales standards when they allow 'non advised sales' across the board,with little or no standards whatsoever?? Again another way to kick the advised sector.Go on the Tories..cut the sh*t out of them!!!I'm lovin it!!
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