Holloway income protection policies could avoid Financial Services Authority's commission ban
Mon, 10 Jan 2011
The Financial Services Authority (FSA) has proposed that income protection plans which require only a small investment element could be exempt from new rules that ban advisers from earning commission for sales of financial products .

Known as Holloway policies, the plans are sold by friendly societies and largely aimed at those on lower incomes. Under the Financial Services Authority's (FSA's) retail distribution review (RDR) friendly societies would have to axe the products or charge a fee to customers for their advice.

The FSA noted that the investment element of Holloway policies made them comparable to with-profit savings products but argued that these products should be exempt from its commission ban where the projected maturity value was less than 20 per cent of the accumulated premiums.

"The proposal to exempt certain Holloway policies with a small investment element from the RDR adviser charging and professionalism requirements recognises the fact that these policies are closer to protection products where risks to consumers are more limited, than investment products," stated the FSA in its quarterly consultation document.
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