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FSA confirms advisers responsible for medical underwriting

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  • 06/11/2012
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FSA confirms advisers responsible for medical underwriting
With the Consumer Insurance act coming into force in March 2013, advisers should ensure their medical assessment approach is compliant and defensible, Morgan Ash has warned.

The underwriting services outsourcer has received confirmation from the FSA that medical assessment is covered under regulation.

It said most IFAs don’t consider they are regulated on the medical information and this is incorrect.

While there are defined requirements for collecting, advising and recording the financial information gathered during the advice process, there is no prescriptive requirement for advisers on how they should collect medical information, or undertake a medical assessment.

This may have led to a belief that the medical assessment is not covered by regulation.

Morgan Ash consulted the FSA and Sheila Nicoll, director of policy at the FSA, said: “FSA rules and principles generally focus on outcomes which must be achieved for customers rather than explicitly prescribing how firms should undertake certain activities (such as acquiring data from customers to support the underwriting processes for general insurance and pension contracts).

“Our rules, for example, state that a firm must employ personnel with the skills, knowledge and expertise necessary for the discharge of the responsibilities allocated to them.

“We would consider that this includes staff assisting customers in submitting personal information used by insurers for underwriting purposes.”

Andrew Gething, managing director of Morgan Ash, noted the answer confirmed the FSA regulations around training and competence apply equally for undertaking the medical assessment as well as the financial assessment.

He said: “Advisers should monitor consumer detriment and this includes any medical assessment that is material, so certainly medical underwriting.

“Advisers currently do not generally do a good job medically, so they have the option of training themselves medically, abstaining and leaving this entirely with the consumer or using a company like Morgan Ash.”

While many providers will use tele-interviewing themselves, Gething confirmed business was growing from advisers using his firm directly, especially in the field of inheritance tax planning.

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