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Regulation should extend to others in the protection chain

From Steve Newman

The FSA has the regulation of the mortgage and life industries nicely tied up – or does it?

Regulation is in place to ensure we exercise a duty of care when advising customers about the risks of taking on a mortgage commitment. Best advice is to ensure that life and critical illness policies are recommended where appropriate. Demands and needs documents are issued to explain to the customer why we recommend they protect themselves and their families.

A good job well done? Not quite. GPs take weeks to respond to life companies’ requests for medical reports and then the life companies’ underwritting departments take weeks to deal with them when they get them.

The result is customers have lots of bits of paper and advice telling them how important cover is, but what use is that when their mortgage completed three months ago and they still don’t have a policy in force?

Also, who is liable? Suppose the customer dies or suffers a critical illness. Will the life company pay out, is it the GP who gets sued or the life company or is it me for not making sure cover is in place at completion?

Further regulation should be put in place to get all the parties involved in protecting customers to act in a timely fashion.

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