The FSA believes there is there is no consumer detriment in allowing advisers who operate under COBS rules to maintain their current commission based charging.
The regulator made the statement in its Consultation Paper 10/8 which examines the potential impact of the Retail Distribution Review (RDR) upon pure protection sales.
In explaining its proposal to allow advisers to continue selling protection products using commission based payments under Conduct of Business Sourcebook (COBS), it said: "The differences between the Conduct of Business Sourcebook (COBS) and Insurance Conduct of Business Sourcebook (ICOBS) rulebooks are limited (with the exception of Adviser Charging) and many firms successfully operate both regimes at present.
"However, since we cannot currently identify any consumer detriment that would arise from allowing firms to apply the COBS rules but not the adviser charging rules, we believe that we should make this rule change so that firms can avoid these costs altogether.
"Firms can still opt to apply the Adviser Charging rules to their pure protection advice if they wish," it concluded.
As part of the consultation paper the FSA is requesting responses to the question: "Do you agree that we should change our rules that allow firms to elect to sell pure protection under COBS so that they can do so without applying the Adviser Charging rules to their pure protection business?"
Responses to this consultation should reach the regulator by 28 June, and a final policy statement is expected to be issued in September.
