FCA Investigates if Commissions Damage Life Insurance Market

You may or may not be aware that after the credit crunch crisis in 2007/2008 the Financial Conduct Authority (FCA) instigated a Mortgage Market Review (MMR) and a Retail Distrubution Review (RDR) of the whole comsuner facing ‘retail’ financial services. 

RDR in Force 01/01/2013

The findings of RDR were implemneted from January 2013.

• Financial advisers must be at least level 4 (National Diploma/1^st Year Degree qualified) and working towards Level 6 (1^st class Honours Degree) qualification. 
• Commissions for advice on pensions and investments advice were banned and replaced by Adviser Fee Charging Only Rules.
• Commissions for non-advised pensions and investments were allowed to continue.
• Commissions for mortgages and protection/life insurance policies were allowed to continue in full whether advised or non-advised.
• Needless to say many banks and insurers closed their huge financial advice arms and started selling services ‘direct to consumer’ D2C.

Ever since, we have argued this was to the detriment of consumers, big financial firms could still sell consumers any type of policy, with no advice given i.e.  no liability for the suitability of the product and full commissions could still be paid.  This risks poor consumer outcomes. 

See: Discounts  Council Tax

FCA Finally Wakes Up to Investigate Insurance Commissions

The FCA has confirmed it has concerns on how insurance protection products are sold with commissions and has launched a Protection Market Review.  As you will note in one of the example links above, we can save clients £000’s in premiums over the years by charging one off foxed fee and taking no commission.

Our Insurance Protection fees: Protect & Insure