St James’s Place divisional director Tony Müdd has accused some non-advised protection broker firms of playing on customer confusion around the difference between advised and non-advised sales.
Müdd also slammed the Financial Conduct Authority (FCA) and said he believed he was not the only person who thought the regulator was guilty of “missing the point” in the division between advice and guidance.
Addressing the Protection Review’s ProtectX6 event, Müdd touched on feedback provided to the FCA’s consultation on its Consumer Duty.
Respondents questioned whether non-advised sales met the requirements of the duty and if the regulator should change the boundary as to when firms were judged to be providing advice.
The regulator subsequently declined to change this boundary, stating it was wary of reducing consumer protection which applied to advised sales, Müdd noted.
However Müdd argued: “I can’t be alone in saying they are missing the point here.
“Consumers often fail to appreciate the difference between advice and guidance and we know some non-advised firms play on this confusion.
“Do the FCA really believe it’s acceptable for these firms to give guidance to consumers, knowing that most [consumers] believe they have been advised, within a lighter regulatory regime?”
But Müdd did concede there was a place for genuine non-advised sales who acted appropriately.
“We have an underinsured population and without non-advised sales, we would have an even greater number of people without the protection products they need,” he added.
“What I object to are those firms playing the spaces, doing so knowingly because the regulations are sufficiently loose.”
The issue of advised versus non advised sales came to the forefront early last month when advice firm LifeSearch published a report strongly criticising broker firms operating a non-advised human sales process and those insurers most supporting that process.
This was met with a retort from Phil Jeynes, director of corporate strategy at Reassured, who defended the non advises sales sector by arguing the industry should embrace modernisation of protection sales and not mourn the passing of old ways.