As part of Health & Protection’s Guide to PMI for new entrants, Jon Derbyshire, training and competency manager at Santé Group explains how a compliant process builds trust with consumers and regulatory certainty.
For advisers and firms entering the health insurance market, compliance should shape the sales process from the very beginning.
It is about creating a clear, consistent and well-documented journey that delivers fair customer outcomes and stands up to insurer, regulator and complaint scrutiny.
The Financial Conduct Authority’s Consumer Duty sets the tone here: firms are expected to put customer needs first and deliver good outcomes in practice, not just in policy documents. https://tinyurl.com/2m236j2b
A good place to start is adviser competence. Firms need people who have the right knowledge, ability and good repute for the insurance distribution activities they carry out.
In practice, that means advisers should be properly trained, supervised and able to demonstrate technical understanding of the products they sell and the rules that apply to them.
Relevant learning often includes sector specific study such as IF7 for healthcare insurance alongside ongoing CPD and a robust training and competence framework. https://tinyurl.com/2fyazmwv
The next building block is knowing your customer through a thorough fact-find. Before any recommendation is made, the adviser should properly understand the client’s circumstances, objectives, budget, priorities and existing arrangements.
In employee benefits, that may include workforce profile, affordability, scheme design preferences and the client’s reasons for introducing or reviewing cover. This feeds directly into Insurance Conduct of Business Sourcebook (ICOBS) requirements on demands and needs.
If advice is given, the recommendation must be suitable. If a firm cannot clearly show what the client needed and why the proposed solution matched those needs, the process is already weak from a compliance perspective. https://tinyurl.com/yubvcvyw
That is why research and suitability evidence matter. Advisers should be able to show the market review or insurer comparison carried out, the key reasons for shortlisting certain options and the rationale for the final recommendation.
A demands and needs letter should not be treated as an afterthought or a template exercise. It should clearly reflect the client’s priorities and explain why the chosen arrangement meets them. Good files tell a coherent story from fact-find to research to recommendation.
Firms need a strong grip on ICOBS disclosure rules and the requirement for communication to be clear, fair and not misleading.
Customers should receive information in good time before concluding the contract and in a way they understand. In practice, this means issuing correct documentation at the right stage, including a Terms of Business Agreement, privacy notice, insurer literature, research output and demands and needs documentation.
For PMI and other non-life insurance it also includes the Insurance Product Information Document where required. Clear explanations around exclusions, moratoriums, underwriting, limitations and claims processes are essential.
Another key area is vulnerability. The FCA expects firms to identify and respond appropriately to vulnerable clients and make sure they receive outcomes as good as those of other customers.
Here, vulnerability may arise through ill health, stress, bereavement, financial pressure or limited understanding. Advisers should know how to spot those indicators, adapt their approach, slow the process down where needed and record any additional support given. https://tinyurl.com/ftda7cce
Finally, firms must document everything and store it securely as per UK GDPR guidelines. Good record keeping is vital from an FCA perspective.
If a complaint arises later, the file should show what was discussed, what documents were issued, when they were sent and why the recommendation was made.
A compliant sales process is not just one that feels thorough on the day. It is one that can still be evidenced months or years later. https://tinyurl.com/5n7sf7hr
