CP10/08: Protection
CP10/08: Pure Protection sales by retail investment firms: remuneration transparency and the COBS/ICOBS election
In their discussion paper on the sale of pure protection, CP10/08, the FSA makes it clear that it wants to ensure that consumers are aware of commission being received either through an advised or non-advised sale if this has occurred within 12 months of investment advice being given by a firm. However, the choices of advice, 'independent' and 'restricted' will not apply to pure protection advice at this stage.
In CP09/31 the FSA set out its initial thinking on the protection market place and confirmed the view that it did not see a case requiring it to write adviser charging across into pure protection business. However, it went on to state that this would only apply to pure protection written under ICOBS and if written under COBS adviser charging would apply.
The FSA have confirmed in this consultation paper that, by stating if pure protection is written under ICOBS and COBS, this can still be written on a commission basis.
The FSA believe that this could cause confusion for consumers and therefore are proposing clear disclosure of commission payments for such protection cases where it is arranged within 12 months of investment advice being given. This disclosure will be required whether it is advised or non advised and whether it is sold under COBS or ICOBS.
In addition advisers who offer pure protection advice in association with investment advice will be required to give a clear explanation in advance of providing services how they are remunerated for protection advice.
The issue of professional qualifications for protection will be addressed in a later paper.
