Over-70s regulation looks set to finally be scrapped following a direct order from The Treasury to t...
Over-70s regulation looks set to finally be scrapped following a direct order from The Treasury to the Financial Services Authority (FSA) late last month, writes Lucy Quinton.
Ed Balls, economic secretary to The Treasury, told the regulator at an FSA conference it should scrap it entirely and, following this, the FSA board has scheduled in a meeting to discuss it.
Should this happen, it would mean insurance conduct of business (ICOB) advisers would be able to sell life assurance to anyone that would be over 70 years of age by the time the policy expired.
The current rule has prevented protection-only advisers from selling term assurance products where the term is greater than 10 years, and takes the customer beyond 70. In such cases, it has then become regarded as an investment product and could only be sold by an adviser with appropriate authorisation.
When it is approved, Robin Gordon-Walker, spokesperson at the FSA, said: "It would probably be implemented with immediate effect".
The industry has responded warmly to the proposed idea.
Nick Kirwan, chairman of the Association of British Insurers Protection Committee, said he was pleased that this was finally coming to fruition as it had been delayed for so long. "Artificial barriers being put in the way to people taking out protection is complete nonsense," he added.
He said the reasons for scrapping it altogether were compelling. They included an ageing population and social factors, such as people working for longer, people taking out longer mortgages because of a breakdown in families and people having children later.
Jason King, managing director at Torquil Clark Life Insurance, added: "This is great news. It doesn't make sense as to why it was there in the first place and why valuable protection was being withheld."
One other idea that had previously been considered was to lift the upper age limit from 70 to 80, but the industry was sceptical of the idea, arguing it would only delay the issue for 10 years.
