Brian Fisher, AXA Lifetime Care Regulation of the LTC insurance industry is long overdue. The lev...
Brian Fisher, AXA Lifetime Care
Regulation of the LTC insurance industry is long overdue. The level of knowledge of products, legislation and the State benefits system, necessary to give sound advice, is at least comparable with any other regulated product. The Code therefore is a welcome move and will ease in the full regulation under the Financial Services Authority (FSA) in 2004.
In reality, the main providers will only need to make minimal changes to their products or processes in order to comply. Furthermore, the majority of LTC insurance plans are already only sold by advisers who either specialise in this area, or at least have a great deal of experience and knowledge.
When you consider the emotive implications involved in selling LTC insurance and the understanding one needs of the softer issues surrounding the provision of care system, it is no wonder many IFAs do not want to get involved. However, FSA regulation will change that. Maybe the new Code will serve as a wake-up call.
Jeremy Davies, Millfield Care Partnership
The ABI's new Code has been welcomed by us as a way of monitoring financial advisers who are not authorised through the FSA. Even though LTC cover is not yet a regulated product, our advisers treat it as though it were fully regulated. Everything the ABI Code suggests is already part of the way we work. On top of that we ensure all our advisers are trained to the very highest levels in the industry.
Until full regulation comes in there is always the chance that LTC cover will be mis-sold ' the ABI's initiative will be a big move forward to minimise this. LTC is a complex area of financial services and we are dealing with a vulnerable sector of the population. Cover should never be sold in isolation ' it should only ever be sold by a fully-qualified and FSA-regulated IFA.
Chris Ellicott, Age Concern Financial Partnership
The Code is an important milestone, rather than a landmark turning point. It commits ABI members to treating LTC insurance as if it were fully regulated ' but that is something which is usually the case already. It also encourages ABI members to allow changes to existing policies to reflect the State's vagaries. As well as asking ABI members to encourage IFAs to become competent in LTC insurance matters and to remain so ' but again this is something most insurers already do.
So much is being done already, but it is good to see a statement binding on ABI members. This should build confidence among IFAs and the public.
What we need now is for all IFAs to advise their 'right age' clients on LTC issues and insurance as a matter of routine ' using the statement to reinforce confidence in them, their advice and the products. For example, you could say: 'Worsening health could mean you face a serious financial problem. I can advise on a solution. To ensure you get good advice, I have undergone specialised training. Moreover, I work to a strict Statement of Good Practice, devised by the ABI. Here is a copy of the Code for you to keep.'
Now this approach would be a landmark.
Owain Wright, Care Funding Bureau
In the absence of regulation, the ABI's move is a welcome one and a great deal of the Code could be used to form the base for regulation itself. The ABI has done everything within its power to tell people how LTC advice should be given, but the ABI's main problem, and one which it must find immensely frustrating, is that it has little real reach where advisers are concerned.
In other words, for advisers the ABI's Code is not the law, it is instead simply guidance and therefore, no matter how much we may wish it, not enforceable. It is similar to taking the police off the motorways and replacing them with polite notices asking motorists not to drive at 100 mph. Those that drive at 100 mph ordinarily, still will.
We need to protect our clients and the industry itself against potential poor practices and bad advice and while the Code sends out the right message in every way there is still a very real need for full regulation to be implemented as quickly as possible.
