The ABI's consultation paper is likely to be introduced by the end of this year
The long term care (LTC) industry will be subjected to stricter guidelines on the sale and marketing of products, following the Association of British Insurers (ABI) decision to strength the voluntary code of practice.
The ABI has issued a consultation paper, Long Term Care Insurance: Best Practice When Dealing with Individual Customers, which is due to be introduced by the end of the year.
Under the proposals companies will be required to prove an assessment of each customer's financial needs and insurers must be satisfied that customers understand a contract before it is signed.
Staff dealing with long-term care products must have detailed knowledge of State benefits and chief executives will be required to prove that their company is up to scratch with the code on a yearly basis.
Ruth Kelly MP, financial secretary for the Treasury, said: 'The Government welcomes this initiative to strengthen the ABI code. Together with the extension of the role of the Financial Ombudsman, the revised code would provide important reassurance for customers. These interim measures will cover the period until statutory regulation comes into force.'
Sales staff will also be required to complete the same training and competence as those completing other investment business.
Philip Spiers, IFA at the Nursing Homes Fees Agency, believes the code will affect the more general IFA who only completes a few LTC cases a year more than specialised LTC IFAs.
He said: 'General IFAs will need to understand the process of delivering long term care advice and it will be important for them to keep up to date with changes in the industry. It could be damaging to the market as some IFAs may be afraid to touch the product as they need to give specialist advice.'
The guidance will affect all ABI members with the code governing the industry until statutory regulation is enforced in 2004.
Consumers are the ones who are set to benefit the most from the proposals.
Richard Walsh, head of health insurance for the ABI, said: 'The consultation confirms the insurance industry is both ready and willing to adopt industry-wide standards to ensure we serve our customers well. Long term care insurance is an important protection for many people. Customers should be able to make their purchase with confidence.'
l Responses to the ABI consultation paper must be in by 31 July.
