Secondary

Illegal Inducements Update

The FSB contacted us, following last week’s article entitled What’s Sauce for the Goose to get more information about the correspondence between a broker and their own consultant.

We used the opportunity to share a few other examples with them, and asked them to provide clarity on the exact application of the two sections of the Short-and Long-term insurance Acts which prohibit the provision of inducements to effect insurance.

Section 44 on “Prohibition on inducements” reads:

No person shall provide, or offer to provide, directly or indirectly, any valuable consideration as an inducement to a person to enter into, continue, vary or cancel a short-term policy, other than a short-term reinsurance policy. The same wording, adjusted to apply to Long-term products, is used in section 45 of the LTIA.

I would have thought, in my own naïve way, that this was fairly clear, but it appears that clarity is not the issue – profit is a stronger determinant, causing providers to flaunt the spirit of the legislation.

We will obviously keep you informed of further details. In Monday’s newsletter, we discuss the anomaly of one product house who was censured by its own industry body for running an advertisement which was found to be “misleading, non-factual and non-verifiable”. There is no news of this being taken further. We ponder on what would have happened, had the perpetrator been an every day advisor?

Watch this space.

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