which would create significant problems for insurance customers. The proposals would be completely unworkable for insurers ...
Insurance Europe has responded
to a consultation conducted by the EC on its proposals regarding
suitability and appropriateness assessments, which will feed into its
upcoming EU Retail Investment Strategy.
The proposals would be
completely unworkable for insurers and would cause significant problems
for insurance customers by restricting their choice of products,
limiting their access to high quality advice, and forcing advisers to
offer them products based on irrelevant criteria. The EC must therefore
completely reconsider its approach.
Insurance-based investment
products (IBIPs) are entirely different from other investment products
and cannot be brought into the same distribution system. This is because
the insurance regulatory framework is different, insurance distribution
systems are different, insurance products are different, and insurance
policyholders have different needs and expectations from other types of
retail investors. If the EC intends to make changes to the existing
Insurance Distribution Directive (IDD) distribution regime, these
changes must be calibrated specifically for insurance markets.
Furthermore,
there is no clear need for these proposals. The IDD provides sufficient
safeguards through the whole product life cycle and there is no clear
evidence that changes are required to the current suitability and
appropriateness system.
In addition, the EC’s consultation
contains important new proposals which require stakeholders to consider
an entirely new way of conducting suitability and appropriateness tests.
It is therefore impossible for the industry to give these proposals
full consideration within the four-week deadline set by the EC.
Consultations such as this must run for a minimum of 12 weeks in line
with the EC’s Better Regulation principles.
Finally, there are
also serious open questions regarding how this new system would operate
in terms of fair competition, liability, advice, costs and product
features, which have been completely overlooked. The EC must therefore
urgently examine these issues before proceeding any further with this
initiative.
InsuranceEurope
© InsuranceEurope
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