Advisers are failing to provide sufficient ongoing advice to clients holding with-profits policies, ...
Advisers are failing to provide sufficient ongoing advice to clients holding with-profits policies, the Financial Services Authority (FSA) has found.
In a briefing, the FSA sent a warning to both insurers and advisory firms that it would take action where it finds customers are not being treated fairly.
The regulator found that although there are 32 million with-profits policies in force, many policyholders no longer have access to the adviser who sold the policy.
For those policyholders that do have an adviser, many are reluctant to advise on existing with-profits policies.
In addition, much of the post-sale communication from the insurer often fails to mention or explain market value reduction free-dates or guaranteed annuity rates. The regulator also found there is frequent use of terminology without explanation, and little explanation as to how the actions of the insurer may affect the policyholder.
Sarah Wilson, director and insurance sector leader at the FSA, warned: "Senior management in both insurers and advisory firms need to re-examine their existing approach and, where necessary, implement changes. Advisers need to provide advice where they have created an expectation that they will do so. Insurers need to ensure post-sale communication is clear, fair and not misleading."
Julie Hedge, principal at IFA firm Christie Scott's, said it was imperative that with-profits policies were reviewed but clients were often reluctant to cash the policy in because of the penalties involved.
She said: "Obviously it would depend very much on the client and doing your research first but personally I think it's probably better to jump ship rather than bury your head in the sand."
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