Payment protection insurance (PPI) providers will soon have to offer customers double the normal coo...
Payment protection insurance (PPI) providers will soon have to offer customers double the normal cooling-off period when buying the cover, writes Peter Carvill.
Revealing some of the changes to the Insurance Conduct of Business (ICOB) sourcebook, the Financial Services Authority (FSA) said the cooling-off period would almost double from 14 days to 30, when the new regulations come into effect next year. Firms would also be required to check the eligibility of clients buying PPI.
The protection industry has given a cautious greeting to the revised sourcebook in advance of its publication on 6 December.
Commenting on the extended cooling-off period, Richard Verdin, sales and marketing director at Direct Life & Pensions, said: "This gives the customer more flexibility so it can't be a bad thing. Generally, I think insurers already exceed the minimum requirements."
Roy McLoughlin, senior partner at Master Adviser, took a contrasting view, believing that the extension would not add anything to a properly conducted sale. He said: "It shouldn't matter at all because if the advice is given properly as to whether the sale is suitable or the price affordable, there shouldn't be any problems."
Robin Gordon-Walker, spokesperson for the FSA, said the ICOB sourcebook was following in the spirit of principles-based regulation, and that the changes were minor and followed on from the consultations in June.
The ICOB rules will come into force in January 2007 but firms will have a six-month transitional period to adopt the changes. Gordon-Walker said this was fair: "These are not unfamiliar things. Six months' transition between January and June 2008 is enough time."
This view was endorsed by McLoughlin, who said that as long as the FSA kept the adviser community fully informed, there should be no excuses for non-compliance.
The ICOB sourcebook will set out standards for the manner in which firms should deal with clients.
