Thousands of homeowners may be unable to pay off their mortgages if the Financial Service Authority ...
Thousands of homeowners may be unable to pay off their mortgages if the Financial Service Authority (FSA) goes ahead with its regulatory proposals to label critical illness (CI) cover as 'high risk', according to Legal & General (L&G).
The provider believes the proposals will make it harder for advisers to sell CI cover, meaning as many as 116,000 fewer homeowners will be protected. According to figures from the Association of British Insurers (ABI), annual sales of CI cover rose from 600,000 in 1999 to 1.2m in 2002. L&G said this increase is down to advisers being able to sell term assurance and CI cover under the ABI code, encouraging more intermediaries to include CI products as part of their advice.
According to the insurer, statistics show 700,000 homeowners a year may not receive advice on CI cover as a result of the FSA's regime.
Graham Newitt, protection and housing director at L&G, said: 'The consequence of the FSA's proposals will be that many advisers will not want to take on the additional costs and burdens of heavier regulation to recommend an add-on product which they are under no obligation to offer.'
