Non-RDR ready IFAs to miss out on Holloway’s products
Advisers will continue to receive post-RDR commission for Holloway-style income protection products but they need to ensure they are fully qualified to level four standards, John Bridge has warned.
The director of sales and marketing at Cirencester Friendly said the mutual, which sells its products exclusively through IFAs, was confident that sales of their policies would hold up in the new regulatory landscape. However, he added that the provider was concerned that advisers who choose not to become RDR-compliant and expect that they will still be able to sell Holloway products after 1 January, will be mistaken, with IFAs and Holloway providers potentially losing out on a valuable income stream.
He said: “We are worried that many advisers are only now beginning to work towards their RDR preparations. Some others have made the decision that they will not continue as IFAs and complete their exams with the alternative plan to concentrate solely on protection.
“This is fair enough, but to be able to sell our products after January they will need to be RDR-compliant. If fewer of them have attained the level four CF30 qualification which is needed to advise on Holloway-style products that could affect the amount of policies we sell.
“Holloway products are designated as investment products and regulated under Cobs. The positive aspect of this is that post-RDR, advisers will still be able to get paid commission on contracts which the FSA deem a Holloway sickness policy.
“This can obviously provide a regular cash flow to their businesses as well as ensuring their clients are protected against the financial impact of illness and injury. But they must ensure that they have fulfilled their RDR requirements. If they decide to opt out in the belief that they can still sell Holloway-style products they will be mistaken.”
Barry Johnson, the owner of Northamptonshire-based Barry Johnson Financial Services, said: “I’m 68, and have decided not to do all of the exams required to fulfil the RDR regulations, so from January, I’ll only be able to give advice on protection products. As far as Holloway policies go that will count me out.
“We have two other advisers who are fully RDR-qualified, and they could give advice on these products, but we tend to separate investment business from protection business anyway. I don’t have a particular opinion on Holloway products, but there might be better ways of investing for clients such as Isas and other income protection plans which don’t require any scale of investment.”