FCA ban to drive up GI cost
He reckons some people with home insurance policies are unaware of exactly what they have and therefore don’t always claim on their policy, but this should change once things are made more transparent.
However the downside is that premiums will go up as the claim to policy ratio increases.
Hall said: “Transparency is a good thing, but one of the unforeseen consequences is products could become more expensive.
“As it stands with home insurance people may not know they’ve got key cover, legal expenses and accidental damage for example.”
But Hall doesn’t think the FCA’s changes will have any impact on either the mortgage protection or income protection arenas, as he thinks neither offers much in the way of opt-out sales anyway.
The FCA found that consumers are widely bamboozled into purchasing add-ons because their focus is on the main product.
The regulator is consulting on the issue until June 25 2015.
Hall added: “Brokers shouldn’t be scared of selling GI, but it should be done properly. It’s not a part-time amateur job now.
“If you are not sure what you are doing you are better off passing the risk onto a firm and getting some commission.
“The majority of mortgage brokers and IFAs are selling it properly anyway – they already discuss what accidental damage is.
“The FCA aren’t saying you can’t advise.”