Much of CP160 makes sense. It is clearly laid out and there is the opportunity for comment. The prop...
Much of CP160 makes sense. It is clearly laid out and there is the opportunity for comment. The proposals include thoughts on status disclosure, standards for advising and selling, training and competence, product information, claims handling and complaints.
At the heart of the paper is a proposal to classify long term care (LTC) insurance, income protection (IP), critical illness (CI) cover and private medical insurance (PMI) as higher risk than, for example, term life, motor or home insurance.
These products are seen as more complex, do have greater barriers for switching and the potential for greater customer detriment if the wrong decision is made. The question is: how much more onerous will the regime be, and could it put people off taking out ' or promoting ' essential protection products?
For higher risk cases there will be a need to gather more information and 'demands and needs' summaries as well as providing 'key fact' documents. These sound close to the 'key features' documents and 'reason why' letters currently required for regulated business. A less onerous 'adequate advice' requirement is suggested rather than 'the most suitable product' requirement from the investment regime.
There is an emphasis on explaining what the customer needs to disclose at point of sale. If this means fewer problems at claim stage that has to be a good thing. There are other positive points. Commission disclosure does not go beyond the current disclosure on request and additional consumer education must be positive. We need to understand better some of the suggestions for post-sale communications, but it is good to see the FSA overtly recognises costly regulatory requirements can mean poorer value for money for customers.
