Advisers need to push critical illness cover up the agenda following a warning from the Financial Services Authority that there are still improvements to be made.Although the regulator gave CI providers a relatively clean bill of health in its review of the sector, it says providers are still not doing enough to treat customers fairly. The report concludes that while firms selling CI cover are making efforts to meet required standards, they need to do more to show they are giving customers a fair deal and ensure they have a better understanding of the product. Stephen Atkins, managing director of Freedom Finance, describes the CI report as an “iron fist in a velvet glove” which will inevitably lead to enforcement action in the future. He says: “The report marks the market reasonably well and comes down hard on TCF issues. The problem with the mortgage market is that general insurance is often seen as secondary, but firms need to remember that from the FSA’s perspective it isn’t.” Atkins also warns that the industry is in for a tough next 12 months, as it seems increasingly likely that the FSA will put mortgages higher on the agenda and start to look at the advice given by brokers in relation to TCF. Nick Kirwan, protection marketing director at Scottish Widows, says: “The FSA has given us a reasonably clean bill of health in this area but that’s not to say there aren’t areas that can be improved on. “Advisers need to ensure customers are clear on what CI is and make sure they have documented why it is suitable for clients. They also should stress to clients the importance of disclosing all their medical information.” However, Kirwan believes that the report shows the industry is taking CI cover seriously and has already made improvement. He says: “Most people realise CI is an important topic and part of TCF. Customers expect a strong steer from advisers and it isn’t fair to arrange a mortgage and not speak about methods of protection. If there are advisers who don’t take it seriously they should think again.” The review found that most intermediaries undertook a detailed assessment of the protection needs of customers before making a recommendation to buy CI and have controls in place to reduce mis-selling. There was also no evidence of scare-mongering or pressure selling. Sarah Wilson, director of retail firms at the FSA, says: “As CI can be complex, firms sometimes have trouble getting customers to understand what they are buying. “This lack of understanding makes it difficult for customers to make a judgement about whether CI – rather than a payment or income protection policy – is the right product to meet their protection needs.”
- Top trends
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Milan Khatri, chief economist at the Royal Institution of Chartered Surveyors welcomes the Bank of Englands unchanged base rate decision.Khatri says: The Bank of England’s decision to leave interest rates unchanged today at 4.5% is welcomed by RlCS, though not unexpected. The UK economy is performing well as rising global activity is helping to propel […]
International private medical insurance (IPMI) can be a complex business, especially when you need to find cover that complies with all the local legislations and regulations of a chosen country.
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