Ruth Kelly, Economic Secretary to the Treasury announced today that long-term care insurance (L...
Ruth Kelly, Economic Secretary to the Treasury announced today that long-term care insurance (LTCI) is to be fully regulated and the FSA will have responsibility for regulating the selling and marketing of these products, to help prevent people from buying unsuitable policies.
The decision follows the Treasury's December 2000 consultation document on long-term care insurance, which sought views on whether the selling and marketing of LTCI should be regulated by the FSA. There were 39 responses and over half agreed with the Government's preferred option that the FSA should be given the power to regulate the selling and marketing of long-term care insurance products.
The Treasury accepts that insurance for the provision of care in old age or long-term illness is a relatively new product but says given the right conditions the uptake is expected to grow. With this in mind, the Treasury believes it is important to give consumers adequate protection at an early stage of the development of the LTCI market.
Ruth Kelly commented: "As with pensions and ISAs, we want to help people to provide for their security whenever they can. Long-term care insurance can be expensive and tends to be sold to people at the same time as wider financial planning for the last few years of a person's life. We think consumers need protection when making critical decisions at this point in their lives."
Kelly added: "If someone eventually needs care, they don't want to find that their insurance won't pay out for the level of care they expected when they paid the premiums. Regulation seeks to prevent this type of scenario. By asking the Financial Services Authority to regulate the sale and marketing of long-term care insurance, we hope to protect consumers and allow the market to develop within that regulatory environment."
The original consultation document and summaries of the responses to it are available at www.hm-treasury.gov.uk
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