As a direct result of the announcement on tax relief, Standard Life, Royal Liver, Norwich Union, Legal and General, Friend Provident, Bright Grey, Liverpool Victoria and Bupa have suspended sales on new business until clarification is made.
While details in the PBR stated that any changes the government decided to make would not effect arrangements made before 6 December, concerns remained over pipeline business waiting to be placed on risk.
Mark Locke, public affairs manager at Aegon Scottish Equitable, commented: “While we have stopped quoting on all portals as an immediate effect of the PBR decision, it is too early to make a decision about our future in the PTA market.
He added: “The industry needs clarification on the whether ‘entered into before 6 December’ mentioned in the PBR means just those policies placed on risk or includes pipeline business awaiting approval.”
Many larger IFA firms, including protection specialist LifeSearch, have stopped recommending PTA to clients and warned charges could be applied retrospectively.
Alan Lakey, partner at Highclere Financial Services, said: “The recent u-turn on tax relief is appalling and comes at a significant cost to the industry. It is also a concern as there are already many consumers failing to protect their assets with insurance and this is something the FSA is always warning consumers about.”
However, Robin Gordon-Walker, spokesperson at the FSA, said: “The FSA’s understanding on the rules regarding retrospectivity and PTA is that any policies in force before the announcement will continue to receive tax relief for the life of the policy.”
