A protection specialist is breaking ranks by arguing a read-across of the Retail Distribution Review (RDR) to the insurance market would benefit the sector.
Peter Chadborn, of adviser firm CBK, says protection is often seen as the "poor relation" in financial planning because it is "judged by different standards" to investments advice.
He argues the RDR, which relates solely to retail investments, represents an immediate opportunity to bring protection advice in line with the rest of the industry.
Most advisers fear a read-across could spell the end for protection, arguing there is "no chance" cover could be sold widely on a fee basis.
The FSA says it is in the process of assessing the implications of the RDR in the pure protection markets.
"I'm certainly not against [a read across] in principle because I believe protection is seen as the poor relation in financial planning," Chadborn says.
"There's a danger people who only operate in protection can become very blinkered from the outside world, so I think regulatory standards should be raised in protection. If that means it falls under RDR then that's the way it has to happen."
Advisers are concerned by the RDR's fee-heavy stance, arguing consumers, already reluctant to buy cover, would be even more hesitant if they had to pay an upfront fee.
"Even though it is not currently included in the RDR remit, it seems almost inevitable that RDR will eventually come to include protection, despite most advisers proclaiming their dismay at the FSA's report," says Matt Morris, senior policy adviser at LifeSearch.
"As there is no investment element in protection for commission to eat into, there is no consumer gain to be achieved from a forced move away from commission.
"Instead there would be complete market chaos and failure as there is no chance at all that protection can be widely sold on a fee basis."
However, Russell Warwick, distribution change director at Prudential, says the FSA is aware protection is a different proposition to investment.
"An automatic read-across would be quite dangerous without fully considering the implications for protection, but the FSA knows that," he says. "It recognises that different markets have different needs and issues."
In December's RDR feedback statement, the FSA said: "Firms can elect to sell pure protection products under either COBS (conduct of business) or ICOBS (insurance), so we will assess the implications of the RDR for these markets as we develop proposals for COBS." It says its position remains unchanged.IFAonline
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