This story has been updated and substantially altered, following new information from the Association of IFAs.
The Aifa says it NOT mandatory for IFAs to use the IDD, provided their terms of business meet the new requirements under general insurance regulations.
Information IFAonline published earlier today had suggested financial intermediaries are required under the Insurance Mediation Directive to issue IDDs on any insurance contract from tomorrow.
According to officials at the Personal Finance Society, financial intermediaries who contacted the FSA’s helpline - seeking clarification on when to use the IDD – had been receiving confused guidance from the FSA whether they are required to use the IDD document.
Advisers who are already regulated by the FSA to conduct life, pensions and investment business are NOT required under COB rules to issue the IDD yet – even though EC rules require advisers to disclose adviser status among other things – as they already do so to clients through existing procedures.
The FSA have advised intermediaries to use an IDD as this would ensure they are then compliant with the IMD.
Fay Goddard, acting director-general at the Aifa says there is clearly confusion on this matter.
Only yesterday, she advised a group of delegates – who believed they will have to issue an IDD along with existing paperwork – there is no mandatory requirement to present clients with an IDD until June 1st, when depolarisation requirements come into play.
The Aifa says it is issuing guidance on the IDD to its members this afternoon to clarify the situation.
Under the terms of the Insurance Mediation Directive, which comes into force tomorrow (15th January), advisers must issue the IDD for "anything which is insurance" according to guidance presented to the PFS.
Even though the IMD affects general insurance, it also covers pure protection, mortgage protection, life policies, pension policies sold in a life wrapper, and investment policies sold in a life wrapper, such as investment bonds.
Mortgage intermediaries have been required to use the IDD since Mortgage Conduct of Business rules came into force on October 31st last year.
However, trade body officials believe intermediaries would be wise to issue the IDD when advising any client, as this will ensure they are compliant with IMD rules.
General insurance regulation becomes the responsibility of the FSA from today and requires any intermediary offering advice on insurance contracts to be authorised to trade.
The industry anticipates, however, the cost of insurance products will rise as a result of the increased regulatory requirement because firms will pass the cost onto clients.
IFAonline apologises if we earlier added to the confusion - we too were working on information supplied at the time.IFAonline
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