Those who view the sale of lump sum ASU as iniquitous wage their war against the wrong target when they attack advisers who validly use it as a Financial Services Authority (FSA) approved tool in the mortgage kit. Surely it is the insurance product providers who should be the focus of opprobrium. Indeed, they set the premiums, they charge the premiums and they collect the premiums.
Now I am not naive, and understand that often there are ‘arrangements’ between insurance providers, and the companies that sell it for them, but it is for the insurance providers to sort this out, before the FSA does. For surely the FSA, while agreeing that the basic concept of lump sum ASU is sound, will at some point question whether it is fair to charge a client more for paying upfront, while someone paying in installments gets a reduced rate.
As a humble adviser, I will continue to use ASU, selling lump sum where appropriate and beneficial for the client. It’s part of my toolkit, and a useful one too. Indeed for some clients it is the only way to provide this kind of protection.
I look forward to either the FSA or the insurers sorting out the cost anomaly (although I won’t be holding my breath).
Stuart Turnbull
blackandwhite.co.uk
