Press Release
Has regulation actually made it better for consumers?
Regulations relating to advised and non-advised sales are letting consumers down claims a leading insurance provider. "The irony is that the regulations were put in place to protect the customer and to make things more transparent for them" says Andrew Perryman who is Sales Director at specialist insurance website www.bestdealinsurance.co.uk. "Yet many are now left financially vulnerable due to the majority of providers selling insurance on a non-advised basis."
In January 2005 the industry regulator the Financial Services Authority ruled that sales of insurance could be done one of two ways - either given on an advised basis or a non-advised basis.
With the former, a qualified salesperson gives substantiated recommendations along with legally binding documents. And should something go wrong with the policy, for example the client is sold an unsuitable policy, then they can sue for wrongful advice.
However, on a non-advised basis, a qualified salesperson is not required, nor documentation relating to anything discussed is necessary. The customer makes their own decision as to what policy is best for them, leaving the salesperson and their company with no comeback should it all go wrong.
Says Andrew: "Selling insurance on a non-advised basis is obviously more attractive to the majority of banks, building societies and insurance companies. There are fewer costs involved as they do not have to pay for qualified staff and there are very few ramifications should their customer buy an unsuitable policy from them."
Andrew also comments that during the sale of insurance on a non-advised basis, any conversation a salesperson has with their client about the different products available, even without giving advice, will be influential on their choice of policy.
"It is impossible to have a conversation with someone and not be influenced" he says "and with so many lenders and brokers tied to a particular insurer, the consumer is still being pushed in to buying a policy that may not be right for their circumstances.
"The long and the short of it is that the very regulations that have benefited the providers who sell on a non-advised basis and were set up to protect the customer are leaving them wide open to choosing an unsuitable policy."
Andrew concludes that sadly consumers are unaware of the implications of not having proper advice from an independent broker. "While they may find what looks like a good insurance deal with cheaper premiums than they have seen elsewhere in the market" he says "in the majority of cases it is false economy as they may well find out when they try to claim and are rejected."
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