Is the burden shifting from consumers on non-disclosure?
Monday, June 10th, 2013

The Financial Conduct Authority’s first quarterly consultation paper is making some small adjustments to the language around consumer disclosure when they take out insurance. The FCA says this is actually bringing ICOB into line with the Consumer Insurance Act 2012. The regulator says it is also bringing its policy into line with FOS and what is established as industry good practice.

But this feels like a shift, albeit a relatively subtle one. This is one key paragraph. ‘The Act replaces the duty on the consumer to volunteer information material to the insurer’s decision with a duty to take reasonable care not to make a misrepresentation during pre-contract negotiations.”

Here is another section – “Whether or not a consumer has taken reasonable care not to make a misrepresentation is to be determined in the light of all relevant circumstance. For example, the type of consumer insurance contract in question and its target market, any relevant explanatory material or publicity produced or authorised by the insurer and how clear and specific the insurer’s questions were.”

The language sounds more consumer friendly but this feels like a shift, and maybe even a slightly lower burden placed upon consumers. There are certainly some interesting issues around explaining a policy for advisers. But expert views are very much appreciated.
Roger Edwards interviewed by the Money Debate in our Brass Tacks series.
Tuesday, October 16th, 2012

In this week’s podcast, Bright Grey and Scottish Provident’s managing director Roger Edwards talks to the Money Debate for its Brass Tacks series. Roger discusses the gender directive, the RDR and what the protection market may look like next year and beyond.  Here are the links to the podcast on itunes and on Feedsburner.

The interviews are very kindly sponsored by agency Space 01. Our recent interviews with Aegon’s Steven Cameron about the RDR from an adviser and a consumer perspective are also available on both links.
Basic advice plus – will the FCA lend its approval to products sold by the ‘dreaded’ commission?
Thursday, September 27th, 2012

The Money Debate believes that Peter Williams’ idea for basic advice plus is an idea whose time has come too late and, er, too early.

It is too late, because it seems almost impossible to envisage the FSA/FCA cooperating in a system that lends its name to approving different products – even price capped and simple ones – when the sales will be incentivised through the commission system which it reviles.

Too early, because even with Lloyds/HBoS joining the retreat from the middle market, I don’t think that is viewed as a crisis yet. I suspect the FCA believes the casualty rate remains acceptable. Only when it becomes politically unacceptable, will it be prompted to act.

It also sets up a very interesting divide between accumulation and a little bit of annuitisation for the less well off and deaccumulation for the better off.  

That would need to be backed by unbiased and very broad-based consumer research.

It would also be good to see at least a rough financial calculation of what the business model looks like, both one attached to a bigger firm and one operating on its own.

Finally, does the exam regime for this sort of adviser simply equate to level three or does it require adaptation? If a full range of protection products were to be allowed, then perhaps it needs a bespoke protection module.

This sort of reform may well be necessary but until we start asking the really broad questions, rather than answering narrow regulatory ones, I just don’t think it will happen. But perhaps Peter will prove us wrong.