ASU cool off period starts tomorrow
Brokers must give clients seven days to decide whether they want to buy accident, sickness and unemployment products after new Competition Commission rules come into force tomorrow.
If advisers are arranging a mortgage and looking to offer ASU they can provide the client with an ASU quote at the time of arranging the credit but must then allow at least seven days between offering the ASU quote and closing the sale.
The client can choose to buy the cover within the seven day period but the adviser must not seek to close the sale within the seven day window.
If arranging ASU just prior to the exchange of contracts/completion of the purchase/re-mortgage, and if this date is more than 30 days after the mortgage offer was received, the seven day rule does not apply.
Geoff Hall, general manager at Berkeley Alexander, said: “There is a fear that the additional requirements on advisers who offer ASU products including Payment protection insurance and Mortgage Payment Protection Insurance could result in many being put off offering these vital protection products to their clients.
“ASU and particularly MPPI are vital protection products and when sold properly provide clients with critical lifeline cover that for some might mean keeping a roof over their and their family’s heads.”
Hall added that whilst advisers have a duty of care toward their clients, increased regulation and the mis-selling scandal have undoubtedly contributed to a fear of advising on these products.
He said: “Advisers need to be aware what the Competition Commission changes really mean and how it affects them.
“The changes are necessary and need not be onerous for brokers and it remains vital that they continue to offer these products to their clients. Let’s not throw the baby out with the bath water.”
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