Uncertainty remains as to whether group life or income protection products offered through flex or voluntary schemes could be caught within the Retail Distribution Review, warns Swiss Re.
The provider warns that the group risk industry must seek clarification from the FSA that group life and GIP will not potentially fall foul of the RDR rules on commission disclosure.
CP10/08, Pure Protection Sales By Retail Investment Firms, published just before Easter, states that retail investment firms must explain how the are remunerated for pure protection services associated with investment advice and disclose the amount of commission they receive if the customer then purchases a pure protection product. Ron Wheatcroft, technical manager at Swiss Re says there is a potential risk that where advisers are giving face to face advice on group pensions and making recommendations on group risk through flex or voluntary benefits, disclosure will be required.
Clarification is also needed that group risk products will not fall within scope of the RDR where they are being discussed in business to business negotiations alongside group pensions, which are covered by the RDR says Wheatcroft.
Wheatcroft says: “We have been saying to the FSA, through GRiD and Swiss Re, ’don’t forget group risk’. Flex and voluantary benefits is an area where we could get tripped up and we need to make sure that draft regulations do not let that happen.
“Where you are advising the employer on GPPs and group risk, it is not clear what the position is with regard to the RDR requirements. Logic would suggest it would be seen as a commercial contract taken out by the employer, but there is a risk it could get caught.”
GRiD spokesperson Katharine Moxham says: “There is a concern as to whether flex and worksite marketing could be impacted by the RDR. We are working to make sure that group risk is treated as commercial and not retail.”