By Leo Bland The long term care industry has been given the strongest signal yet that LTC insurance ...
By Leo Bland
The long term care industry has been given the strongest signal yet that LTC insurance is to become a regulated product. The move comes just months after the FSA and Treasury were attacked for 'dragging their feet' over the issue.
The Parliamentary joint committee, which is working on the Financial Services and Markets Bill, has recommended that LTCI should be included within the remit of the FSA. It recommends that a decision in principle should be taken in favour of regulating LTCI and that this should be implemented without delay.
The move follows an attack earlier this year on the FSA and Treasury over LTCI regulation by a member of the PIA board and Royal Commission on Long Term Care.
David Lipsey, writing in a note of dissent in the Royal Commission report published in March, described the evidence given by the FSA to the Commission on the issue of regulating LTCI as: "an exemplar of bureaucratic foot-dragging," and quotes the FSA as giving evidence that the LTCI market is: "still at a formative stage," and that there is: "little or no evidence of mis-selling."
The Financial Services and Markets Bill will not include provision for regulating long term care policies, although the way will be open to do this through secondary instruments. But the final decision for LTCI to become a regulated product would need to be taken by the Government.
The Financial Services and Markets Bill is due to be put on the statute book in the middle of next year. LTC experts are seeing the backing of the Parliamentary joint committee which is putting together the Financial Services and Markets Bill as the strongest signal yet that LTCI will be regulated.
Sandy Johnstone, long term care strategy manager at CGU, said: "No one has ever said that LTCI should not be regulated. Given a fair wind, the likelihood is that LTCI will become regulated. But we might have to wait longer than next summer.
"I am sure the insurance industry does not permit LTCI to be sold by people who are not regulated. But with LTCI under the FSA, we would have a situation where the only people who are able to sell LTCI would be regulated."
Hywel Jones, long term care marketing manager at Norwich Union, said: "This market should be regulated. We have been calling for regulation for the whole of the LTC market for a couple of years now. It is something that is long overdue."
The main Royal Commission report on long term care recommended that personal care should be available after assessment and according to need, and paid for out of general taxation.
It also recommended that normal living and housing costs should be the responsibility of the individual, according to their ability to pay. If adopted by the Government, the proposals could lead to cheaper premiums for long term care cover.
