A few notes on the most up to date regulation is perhaps overdue, normally regulation is part of work and not something the general readers care about, but with the increased focus on it we have had people asking how it works so I’ll start to cover some of it.

The Consumer Protection Code (CPC) puts several responsibilities onto financial firms, it offers various protections to consumers and is available on the web.

One of the requirements is for the firm to have a ‘terms of business’ letter which they give to clients prior to offering advice and is covered in section 4.13 of the code.

Using the term ‘independent’ are no longer usable at will. An intermediary can only use the term ‘independent’ in their trading or company name (or in how they describe themselves) if their principle regulated activities are based on fair analysis of the market and it allows the consumer to pay for their services via a fee.

In practical terms it means 75% of turnover is done on a ‘fair analysis’ basis, fair analysis is defined in the code as ‘providing services on the basis of a sufficiently large number of contracts and product producers available on the market to enable the intermediary to make a recommendation’.

For this reason a ‘tied’ broker (who only brokers on behalf of one firm) cannot offer ‘fair analysis’.

To use the term ‘broker’ (for insurance) the firm must hold at least five agency appointments.

There are also new rules about ‘vulnerable customers’, being vulnerable is described in the code and broken down into three broad categories where things such as their age, any disability, income, and other circumstances are taken into account.

Section 5.19 of the CPC covers ‘Reason Why’ statements or ‘statement of suitability’, this is where a financial provider has to explain to the person getting the advice ‘why’ their decision is suitable and relevant to them. It shouldn’t be pre-made, it must be tailored and cover the various needs/objectives and other details should be covered off.

Section 4.57 is about remuneration and all intermediaries are required to disclose all non insurance commissions, fees and remunerations. It doesn’t apply to life insurance but does to mortgage brokering and deposit brokering.