The Financial Services Authority's (FSA) initiative of treating customers fairly (TCF) was put under...
The Financial Services Authority's (FSA) initiative of treating customers fairly (TCF) was put under the spotlight at a seminar held by Munich Re this month. With speakers providing IFA, provider and reinsurer perspectives on the implementation of the rules, it proved to be an interesting day.
Although the FSA's regulatory regime has been a long time coming, it seems that no amount of preparation can safeguard against a possible backlash.
Fears were raised over the lack of consistency surrounding some of the rules. While the market wide TCF initiative was warmly welcomed, those rules that apply to advised sales only remain a cause for concern.
The worry among the IFA community is that non-regulated advice from providers offering an information only service will lead to the decline and potential elimination of advised sales. These concerns seem well-founded. There is indeed a lack of distinction between what denotes advice and information, especially to consumers. But to the FSA, are the boundaries that blurred?
Consumers who use an IFA for their protection purchases are doing so because they want advice on the best decision to make. Therefore, it is the adviser's job to ensure they do just that. Those who choose to shop directly through a non-advice supplier are gathering information, confident in their decision to satisfy their own protection needs. A view likely to be adopted by the FSA.
Further changes also seem likely if the Association of British Insurers' investigation into commission bias takes hold. While no evidence against commission-based advisers was found, it seems the quality of advice given to consumers is being scrutinised from every angle.
Angela Faherty, editor, COVER
