Protection
Kitemarks considered/thoughts on a TPR/FCA merger
Friday, August 17th, 2012

A few columns for your perusal, both featuring on FundsNetwork. Last week I gave my thoughts on kitemarking from an IFA’s point of view asking if it a threat? You could argue that this is a slightly insular way to approach it. I would say it’s fair enough given the climate.  

And in the latest column here, I consider some of the arguments surrounding a possible merger between the TPR and the FSA/FCA.

Finally, here is this week’s news round up on AdviserHome which is indisputably the world’s best IFA trade news round up certainly out of any IFA trade news round ups published this afternoon.

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Low to middle earners – what’s the advice? Protection or auto-enrolled pension?
Thursday, August 16th, 2012

Is there an advice and distribution issue surrounding auto-enrolment and protection as family budgets remain tight on the eve of a pensions reform based on inertia?

For example, what is more important if you have a mortgage, a young family and a tight budget – protecting the mortgage or paying into a pension to pick up those employer contributions? If money is tight surely it’s the former.

It is not a new dilemma for advisers discussing protection and long term savings and probably something IFAs are used to balancing.

But given the economic situation, for some income groups, say those who may always rent should they really be in the pension scheme? It is a bit of an advice minefield. For example, the state doesn’t generally throw pensioners out on to the street. Housing and council tax benefits are generally means-tested not just the state’s top up pensions benefits. Even the upgrade and flattening of a unified state pension has been delayed. So what is the advice where someone is on a low income say in the teens or low twenty thousands? Ok, if you can afford to, don’t rely on the state. But if a family have only a little financial slack are they not better insuring the breadwinner’s future earnings?

Of course, very few of these people will get near regulated advice. Some will get information from their employer or employer’s adviser. Of course, there is always the Money Advice Service. Wonder what the MAS line is? Or perhaps more importantly, if advisers do advise anyone, what does FOS think?

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Protection review – almost live blog on the last debate (harder than it looks)
Wednesday, July 11th, 2012

Which?’s Martyn Saville tells the Protection Review that some of the products sold by the industry are really fantastic and should be celebrated. He has also suggests that it may be possible to talk about what you are protecting including difficult things like death. This strikes me as a huge departure from the previous attitude of many consumer groups. But how scary would Which? like the industry to go in its marketing?

Paying too Much’s Michael Ward (formerly boss of DL&P) asks intermediaries what percentage of their single life term assurance is placed in trust comparing this unfavourably with Lloyds/Widows direct sales and suggests it should have to be included on IFAs’ RMAR to improve the statistics.

Lloyds Bank/Scottish Widows Johnny Timpson notes that the Consumer Insurance Act due to come in April  gives providers much more of an interest in how restricted advisers advise (I don’t think many advisers whether IFA or restricted know this) and says the bank is definitely on the hook for its advisers’ advice given changes to agency law.

FOS’s Melissa Collett puts the aggregators on the spot on this issue asking for their attitude to the act with a fudged answer from Moneysupermarket. A spanner in the aggregators’ works perhaps.

“The act will change the legal situation. Providers will be responsible for a wider group of distributors than before. The point of act is to look after the consumer in this situation,” says Collette.

Lifesearch’s Tom Baigrie says customers are not put off because of worries about IP and CI not paying out but because it is not in their consciousness. On the advice issue, he says almost no consumers who go online want advice but most of them need it and as far as possible they should be persuaded they need it.

Baigrie also suggests that simple products might not need underwritten to be simple but asks what would they cost (a lot he implies) and would it be good advice. Which?’s Saville says they need underwritten and mentions that PPI as what could go wrong without it.

Plan Money’s Peter Chadborn suggests that providers need to help educate non-specialist IFAs who may sell more protection to keep up IP and CI sales in this challenging climate.

There is a big debate about what happens when a customer is left destitute when they hit problems and have the wrong cover. One view from the floor is that life offices should at least tell customers that other types of cover are on offer when they buy.  Moneysupermarket’s Emma Walker say they will consider how they might incorporate this into their thinking.

For next year, Which? says one of the biggest challenges next year will be stopping the cancellation of policies from cash-strapped consumers.

Baigrie says that from quarter one next year prices will rise but adds that this will hurt his non-advised rivals who simply churn. (a little tongue in cheek perhaps). Chadborn is not expecting a big change in business levels – perhaps a reflection of how the good bit of the advice market operates. More analysis tomorrow.

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