FSA meets with insurers to debate growing STIP fears

The closed-doors meeting was hosted by industry association Protect for its insurer and adviser members to debate short-term income protection final guidance with the regulator and Office of Fair Trading.

Steve Devine, chairman of Protect, said it was clear from the meeting there was "suspicion" on how the guidance was going to be applied and that the industry wanted more clarity on the products.

He said: "Insurers are uncertain about what retrospective regulation may be applied when selling this product and they do not want to be involved in any form of regulation scandal following PPI."

An FSA spokesperson said: "We welcome the robust exchange of views. As with any rules or guidance we put out, firms can approach supervisors with specific questions about their meaning or implications."

Dennis Haggerty, attendee at the meeting and marketing manager of D2C provider iProtect, said: "The FSA is scared of another PPI scenario. The FSA has said it will say something further if it gets individual concern about it.

"The regulator's job is not done because of the lack of certainty in the final regulation. But the FSA has said it cannot define what an approved product looks like because that is not its job."

Peter Eisenegger, member attendee and on the executive committee of the National Consumer Federation, said the FSA's final guidance was good documentation of the lessons learned from PPI mis-selling but did not offer anything further.

He said: "What we have in the guidance is what bad looks like. But what does good look like? This is the next step we need to be confident in the product and it needs to be more transparent. But the regulator has made it clear that its role is not to approve products.

"The regulator did come into the lion's den at the meeting though so fair play to it for that."

Eisenegger said low STIP sales would not lift unless the trust barrier with the regulator was tackled.

An adviser meeting attendee, who did not want to be named, said: "It was clear that those at the meeting wanted more professional guidance on these products. There was a considerable and palpable lack of trust for the regulator."

Members of the Protect association debated the final guidance on PPI-style products - including STIP and debt waiver - with Julian Watts, retail conduct risk at the FSA and Martin Goulden, head of credit policy at the Office of Fair Trading (OFT).

January FSA final guidance on 'payment protection' products - such as short-term income protection - stated that firms distributing must ensure salespeople did not have inappropriate incentives to sell.

The FSA identified payment protection products as those offering individual consumers short-term protection against potential loss of income.

The regulator said in the guidance that it was necessary to prevent the problems associated with payment protection insurance (PPI) recurring in a different generation of products.

 

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• Topics
• MPPI
• Regulation
• STIP
• FSA
• OFT
• PPI