The Life insurance Association has warned that its ability to comment on CP 146 is “severely hampered” by not having information which will emerge in consultations later in the year on the regulation of general insurance, polarisation and product disclosure.
It its response to the FSA, the LIA stresses that consistency between the mortgage, insurance and investment regimes is essential. John Ellis, LIA head of public affairs, says: “This is not just consistency for consistency's sake.”
He adds: “There will be practitioners undertaking multiple roles and insofar as clients need a comprehensive service, they should be able to deal with an adviser whose position is totally clear no matter what part of the portfolio is being addressed.”
The LIA is concerned about the 'non-advised sales' route. Ellis says: “It seems to us that sales are either advised or they are execution only. The introduction of a person providing information and using filtering questions creates misunderstanding on the part of clients that they are receiving advice.”
The LIA also believes that it would be confusing if there was a different definition of 'independent' for the mortgage, investment and insurance regimes, but sees no problem with regard to firms adopting a different status for different regulated products. It agrees that there should be a rule on excessive fees for advice or arranging.
The LIA approves of the pre-application instructions, but believes information needs to be carried forward into a suitability letter. It sees nothing wrong with filtering questions in themselves, but warns that it would be very easy to stray across the line into advice.
Ellis adds that it is inconsistent that the sale of Home Reversion Schemes is not within the scope of the regime. He says: “Considerable harm could be done to consumers if proper advice is not given.”