Ambiguity will soon be set aside in terms of insurance advice as advice definitions will be made clearer under the Insurance Distribution Directive (IDD) following a series of consultations.
“The Financial Conduct Authority (FCA) is set to provide more clarity this year on how the European Union’s incoming Insurance Distribution Directive is to be implemented, and what will constitute ‘advice’ under it,” reported
FT Adviser.
The report noted that a policy statement is expected to be published in September. It will set out how firms regulated by the FCA are supposed to implement the directive come February as well as what will be considered as advice under the IDD.
The IDD defines “advice” as the provision of a personal recommendation to a customer, either upon their request or at the initiative of the insurance distributor, in respect of one or more insurance contracts.
Meanwhile,
FT Adviser said, “However, the definition of advice in the UK is still complicated, with the Financial Advice Market Review (FAMR) consulting on additional definitions, Mifid II tightening up on what constitutes investment advice, the IDD attempting to tidy up what constitutes advice, and the end client trying to work out whether they’ve been given information or advice.”
As for the FAMR, an insurer has criticised its progress. Andy Briggs, chief executive of
Aviva’s UK life business, on Tuesday was quoted as saying, “The need for advice and guidance was still there but it wasn’t as strong as it is now and they are having to make a decision about taking a lump sum, going into drawdown or buying an annuity.”
He said the vast majority of people are doing that without advice or guidance and Briggs believes the outcomes will be poor.
“Frankly where FAMR has got to so far is not good enough,” he said.
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