Life Assurance disclosure: The PIA reports on the first three years of the regime

United Kingdom

Life assurance disclosure: the PIA reports on the first three years of the regime

In its third report on Life Assurance Disclosure, the PIA has indicated that it is still not happy with a number of developments in this area and it intends to bring forth proposals to deal with these concerns.

The principal concern is that key features documents tend only to illustrate the amount which an investor will get back on cashing in the policy if the premiums are maintained throughout the full term. There is often no indication of the value if policies are converted to paid up, or a premium holiday is taken. The PIA therefore proposes to extend its disclosure requirements in this area to improve transparency and to encourage competition.

In addition, the PIA is concerned that competitive types of long term investments are not sufficiently available to small savers. Many policies currently have minimum levels which are comparatively high, and the PIA is looking at ways in which this problem can be addressed.

Finally, the PIA is concerned that the commission paid on pension income draw downs varies widely between companies and this may give rise to the risk of biased advice.