ICOBS 5.3 Advised sales

Suitability

ICOBS 5.3.1R

A firm must take reasonable care to ensure the suitability of its advice for any customer who is entitled to rely upon its judgment.

Suitability guidance for protection policies

ICOBS 5.3.2G
1
  1. (1)

    1In taking reasonable care to ensure the suitability of advice on a payment protection contract or a pure protection contract a firm should:

    1. (a)

      1establish the customer's demands and needs. It should do this using information readily available and accessible to the firm and by obtaining further relevant information from the customer, including details of existing insurance cover; it need not consider alternatives to policies nor customer needs that are not relevant to the type of policy in which the customer is interested;

    2. (b)

      1take reasonable care to ensure that a policy is suitable for the customer's demands and needs, taking into account its level of cover and cost, and relevant exclusions, excesses, limitations and conditions; and

    3. (c)

      1inform the customer of any demands and needs that are not met.

  2. (2)

    1This guidance does not apply to payment protection contracts or pure protection contracts included in a packaged bank account.

    1

Suitability of advice on policies included in a packaged bank account

ICOBS 5.3.2AR

1In taking reasonable care to ensure the suitability of advice on a policy included in a packaged bank account, a firm must:

  1. (1)

    establish the customer's demands and needs by using information readily available to the firm and by obtaining further relevant information from the customer, including details of existing insurance cover; it need not consider alternatives to policies nor customer needs that are not relevant to the type of policy in which the customer is interested;

  2. (2)

    take reasonable steps to establish whether each policy included in the packaged bank account is suitable for the customer's demands and needs, taking into account its level of cover and cost, and relevant exclusions, excesses, limitations, and conditions;

  3. (3)

    inform the customer of any demands and needs that are not met; and

  4. (4)

    explain to the customer its recommendation and the reasons for the recommendation.

ICOBS 5.3.2BR

1A firm must make a record of the suitability assessment, the recommendation given and the reasons for the recommendation and, if the customer proceeds with the recommendation, retain it for a minimum period of three years from the date on which the recommendation was made.

Advice on the basis of a fair analysis

ICOBS 5.3.3R

If an insurance intermediary informs a customer that it gives advice on the basis of a fair analysis, it must give that advice on the basis of an analysis of a sufficiently large number of contracts of insurance available on the market to enable it to make a recommendation, in accordance with professional criteria, regarding which contract of insurance would be adequate to meet the customer's needs.

[Note: article 12(2) of the Insurance Mediation Directive]