Just before flying off to Sweden for Christmas, the Financial Services Authority (FSA) published its...
Just before flying off to Sweden for Christmas, the Financial Services Authority (FSA) published its Insurance Conduct of Business (ICOB) sourcebook, completely ruining my plans of having a relaxing press day.
However, apart from the initial disappointment that my last day in the office would not be as chilled out as I had anticipated, I was relieved that the regulator had decided against keeping the industry in the dark about what the new regulatory regime would mean - something many feared would have happened when the regulator announced in early December that the sourcebook had been delayed.
So what is the gist of the ICOB sourcebook? Here is the rundown:
The new rules will come into force on 6 January, giving firms a six-month transitional period to implement them.
Term assurance has, to most advisers' relief, been classified as a higher-risk product despite the Association of British Insurers being against it, and will now come under the same bracket as critical illness and income protection. Payment protection insurance will also be in the same category but a stronger framework of rules will be applied to back the FSA's drive to improve selling standards in this area.
Meanwhile, private medical insurance (PMI) has ended up in the same category as general insurance products such as travel insurance. Some PMI intermediaries do not seem to be overly pleased, however, the FSA stood by its decision, stating that: "None of the respondents who wanted PMI in the protection category provided enough convincing analysis of how consumer detriment would arise, or how much, to support their views."
The ICOB sourcebook aside, it has been suggested that the Retail Distribution Review, which will be published in Q2 this year, will affect protection sales as well as investment business.
Ho hum. So it looks like 2008 will be the year of regulatory changes. Let's just hope they will have a positive effect on the industry rather than forcing more advisers to throw the towel in, which - FSA take note - simply would not be very helpful!
