Protection products such as critical illness, income protection and term assurance may come under th...
Protection products such as critical illness, income protection and term assurance may come under the control of the Financial Services Authority (FSA).
While the regulator has only confirmed it will regulate general insurance and mortgage advice, the regulation of long term health insurance has not been ruled out and, depending on the results of the consultation paper, may be worked into the new regime.
The FSA said advice given on any product that may put consumers at risk will be considered by the Treasury to be included under the regulatory proposals.
Jackie Blyth, spokesperson for the FSA, said: 'We want to regulate products with a degree of consumer risk attached to them. Until the Treasury finishes its consultation, we do not know which product areas this will include ' a cross-benefit analysis needs to be carried out. Products such as critical illness, term assurance and income protection are hard to categorise and may be included under the new regulatory regime, they are not being ruled out.'
The news means some advisers working in the sector could be facing mandatory regulation for the first time.
However, Roger Edwards, head of products at Scottish Life, said the sector is already effectively self-regulated and more layers of regulation could ultimately mean higher premiums for consumers.
'I am not opposed to regulation, but would question whether it is the right route for products such as critical illness and income protection as there is a lot of self-regulation in place. The ABI's Statement of Best Practice already means members have to produce key features documents and word policies in a certain way.
'If the FSA wants to regulate these areas, it should look at the good work already done by the ABI and rubber stamp that, rather than create a new regulatory regime from scratch. Also these product areas are extremely price-driven. Further layers of regulation will mean business is more expensive to write which could mean premiums would be increased if the FSA was to step in,' he said.
