FSA Reform of Insurance Sales Regulations
by Gill Montia
Story link: FSA Reform of Insurance Sales Regulations
The Financial Services Authority (FSA) is planning a major reform of the regulations that need to be observed by those selling insurance.
In its consultation paper, the FSA is proposing a differentiated approach to the conduct of insurance business.
In the case of general insurance, such as household, motor or pet insurance, business will be conducted according to principles and high-level rules (except where provisions are required by European Union Directives).
This will offer greater flexibility to insurance firms, although the FSA expects the standards of conduct and consumer protection to remain at today’s levels.
In the case of protection products, such as critical illness cover, income protection and term assurance, the FSA is proposing to introduce a number of new rules that should improve selling practices.
Included is a new standard that will apply to all protection products, stating that oral disclosure on behalf of the selling agent must be sufficient to allow the consumer to make an informed purchasing decision.
For example, where a discussion is taking place, price information should be provided orally.
Other measures, such as extending the cancellation period from 14 days to 30 days, will apply to payment protection insurance only.
The new regulations are expected to come into effect in January 2008, following a period of consultation.
Provision will be made for a transitional period before full implementation.