Protection specialists have welcomed the conclusions on the sale of pure protection released today by the FSA in PS10/13.
The FSA's decision to allow firms who sell pure protection under COBS - rather than ICOBS - to continue to do so after the RDR is implemented, without having to apply the rules on Adviser Charging to their pure protectuion sales, has been applauded.
In its final rules on remuneration for pure protection sales under the conduct of business sourcebook (COBS), published today, the FSA says: "If firms wish to charge a single fee for their pure protection services and investment advice, then they are free to do so. The remuneration transparency proposals seek to help customers understand how their adviser is remunerated and the total remuneration received."
IFA Peter Chadborne, principle at CBK Colchester, comments: "Originally the FSA indicated that they would not allow this, which would have been a pain.
"It would have been a nonsense to work under two regimes with the same client at the same time in order to claim commission from the protection aspect. As for the remuneration transparency rules; perfect. Why wouldn't we be transparent anyway?"
Alan Lakey, principal at Highclere Financial Services, cautiously agrees: "This makes sense, the FSA did what I hoped for. However there is the proviso that this is part of an overall strategy that doers not make sense. There is still no logic in having the investment part of an IFA's business under the RDR and the protection part not. The FSA are still making a pigs ear of the RDR."
