Selected Autumn 2018 - Issue 3

Selected Autumn 2018 - Issue 3

A Tenet Group Publication

Issue 3 Autumn 2018

SPECIAL FEATURES Meet the new TS&R Team IHT - The elephant in the room?

OTHER FEATURES What’s the latest in the industry? A focus on events coming up!

Six things you need to know about the Insurance Distribution Directive (IDD)

Protection – delivering on our promise

We recognise that all claims are different and need personal attention. Our priority is to pay all valid claims quickly and with as little hassle as possible.

In 2017 we paid:

98.14% 93.6%

96%

of life protection claims

of critical illness claims

of income protection claims

Source: Aegon claims statistics, 2017

Visit aegon.co.uk/claims to find out more.

The Latest Provider Support Offering insight into market conditions and adviser opportunities

Why did people claim? The main reason to claim was for cancer

60%

29%

of our life protection claims were as a result of cancer 42%

of critical illness claims were for cancer

of income protection claims were as a result of cancer

Cancer, heart attack and stroke accounted for 80% of all critical illness claims

Source: Aegon claims statistics, 2017

To find out more, visit aegon.co.uk/claims

A Tenet Group Publication

Issue 3 Autumn 2018

SPECIAL FEATURES Meet the new TS&R Team IHT - The elephant in the room?

OTHER FEATURES What’s the latest in the industry? A focus on events coming up!

Six things you need to know about the Insurance Distribution Directive (IDD)

The Latest Provider Support Offering insight into market conditions and adviser opportunities

WELCOME – 3

CONTENTS… what’s in this issue

Editor’s Foreword

4 What’s the latest in the industry?

Simon Broadley, Adviser Propositions Director, provides the regular update on regulatory matters in a period where we have a bit of respite from the usual pace of regulatory change. know about the Insurance Distribution Directive (IDD) If you play a part in putting insurance in the hands of a consumer, the IDD is of relevance to you. (TS&R) have extended the team. Meet the new team and find out more about the support services they provide to our Select firms. 10 A focus on events coming up! All the latest taking place this summer and coming autumn, including the annual Adviser Forum. The need for good IHT and estate planning advice has never been greater, so why is it that IHT planning is still the elephant in the room? 16 Recommend TenetSelect support and win, win, win 17 Grow your business with help from Tenet… 14 IHT - The elephant in the room? 6 Six things you need to 8 Meet the new TS&R Team Following the recent announcement of a restructure of TenetLime, Technical Services & Research

A warm welcome to the autumn issue of selected In this issue our headline article focusses on the upcoming Insurance Distribution Directive (IDD) - essentially MiFID2 for insurance! This is effective from 1st October 2018 and aims to create a level playing field across all participants selling insurance products - all to ensure consistent standards, increased transparency and consumer protection and to promote competition within the market. If you play a part in putting insurance in the hands of a consumer, the IDD is of relevance to you. Our article on page 6 highlights the six key things you need to know and there is also a webinar available to view – see our Events article on page 11. Also in this issue Simon Broadley, Adviser Propositions Director provides our latest regulatory news update. You can read this regular feature on page 4. It touches on the IDD and also Defined Benefit Scheme Advice and highlights the Senior Managers and Certification Regime (SM&CR) – asking ‘which regime are you?’ In this edition of selected we meet the extended Technical Services and Research team who have grown as a result of the restructure of TenetLime. Jo Rigby, Head of Technical Services & Research introduces her team. Take a look at the support services they can provide for Select firms – see page 8. With the amount of wealth being passed down from generation to generation increasing over the last few years and families now bearing the brunt of the IHT bill, the need for good IHT and estate planning advice has never been greater, but why take on the stress yourself? Tenet’s Paraplanning team simplify the complexity of IHT and estate planning no matter what the solution, so could they help you and your clients? Take a look at page 14 and 15. Finally, don’t forget that you may be able to recommend TenetSelect support and generate income as a result. Perhaps you know an adviser or firm using another service provider that is not happy with the service they are receiving? Or maybe a friend or ex-colleague is starting up their own directly authorised business. Whatever the reason, maybe they would like to consider TenetSelect for support. See page 16. I hope you find selected an interesting and useful read, and if you want me to include anything else in future issues, don’t hesitate to get in touch – email [email protected] Best wishes Sara J Healey Marketing Consultant

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14

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Boost your business this autumn by viewing the marketing toolkit and the range of support available.

37

PROVIDER SUPPORT 18 – 40 Latest News and Products

39

BESTNETWORK

Contacts

Editor Sara Healey

Published quarterly by Tenet Group Limited 5 Lister Hill, Horsforth, Leeds, LS18 5AZ

selected Magazine is for internal purposes only and is not intended as an advertisement. As a result this should not be issued in any form to clients. Not all the products in this feature are the responsibility of the Tenet Group Limited. Terms and Conditions. Although every effort has been made to ensure the accuracy of the information contained in this publication, The Tenet Group cannot accept responsibility for any errors it may contain. The Tenet Group cannot be held responsible for the loss or damage of any material, solicited or unsolicited. No reproduction of any part of this publication, in any form or by any means, without prior written consent from The Tenet Group. The views expressed in this publication do not necessarily reflect those of the advertisers or the publishers.

Tel 0113 239 0011 Fax 0113 239 5322

Selected - a Tenet Group publication­

4 – INDUSTRY UPDATE

What’s the latest in the industry?

In a summer that will no doubt stay in our memories for years to come for football almost coming home and having some actual summer weather, we also seem to have enjoyed a bit of a respite from the usual pace of regulatory change.

A few months down the line from GDPR implementation, a large reduction in related calls to our compliance helpdesk would seem to suggest a growing level of confidence with the requirements. The ICO has stated they’re looking for ‘dedication rather than perfection’ so as long as you evidence the progress you have made and formalise a plan for completing what remains to be done then you are in a good position. So, what’s been happening within the industry and what’s on the horizon?

Simon Broadley Adviser Propositions Director

INSURANCE DISTRIBUTION DIRECTIVE

The Insurance Distribution Directive (IDD) - essentially MiFID2 for insurance! – is coming into play on 1st October 2018. It aims to create a level playing field across all participants selling insurance products to ensure consistent standards, increased transparency and consumer protection and to promote competition within the market. Applying to all businesses involved in the insurance supply chain, it will impact sales of pure protection, general insurance, investment bonds and other insurance based investment products (IBIPs), including online distribution, such as via a website or product comparison sites. Essentially it will have minimal impact on firms’ day-to-day operations but the broad scope makes small changes in a number of areas. Based on your feedback on our GDPR support, we’ve provided upfront a plain English guide and checklist, an FAQ document and hosted a webinar that you can now watch on demand. Anyone distributing insurance products will have to log at least 15 hours’ of continuing professional development (CPD) per year

post-October and for our advisers, the change here is that now 15 hours have to be identifiably insurance-related and that this requirement extends to all staff involved in the sale of insurance, including arrangers, paraplanners and claims handlers. This may mean that additional people in a firm will have to now record CPD, so affected staff will need to be briefed and process to maintain records to be set up. Firms must nominate a named individual to keep a record of the CPD undertaken by each relevant employee over a 12 month period and be able to provide this to the FCA on request, with records needing to be retained for 3 years. Tenet already provides substantial support to meet your CPD needs and will continue to do so. We’ve already updated our policies and template documents where necessary and you will need to make minor updates to your Initial Disclosure Documents in terms of your non-investment insurance services. See the IDD guide for more details.

SENIOR MANAGERS AND CERTIFICATION REGIME (SM&CR) - WHICH REGIME ARE YOU?

The FCA has recently published its policy statement and near final rules on the extension of the SM&CR Regime to the rest of the firms it regulates. There are three SM&CR regulatory regimes and in order to design and tailor the support we offer to help you manage this change, we recently sent out a short survey to identify which regime our directly authorised firms fall within, with support to help you make this decision. Plus the FCA now has a firm checker tool for SM&CR on its website, where you can input your firm’s details.

Our expectation is that most firms will fall into the Core regime and the balance into the Limited Scope one. It is unlikely that any TenetSelect clients will fall into the Enhanced regime, which for example Tenet’s networks will sit within. We will be back in touch once we have the results with support tailored to your regime, so if you haven’t done so already, please ensure you respond to our survey (one response per firm).

DEFINED BENEFIT SCHEME ADVICE

The regulator continues to scrutinise this area of advice very closely, particularly in the wake of the recent issues with the British Steel scheme. In August, it undertook an exercise of sending questionnaires relating to DB transfer activity to all firms holding the pension transfer permission, which marks phase four of its multi-firm supervision exercise, which has been ongoing since October 2015. Rest assured we will continue to provide guidance and support on how principals can improve their oversight in this specialised

area of advice. Our Head of Policy attended The Great Pension Debate in Port Talbot in July and in our August Regulation Matters bulletin, we shared some of the insights from this, as well as outlined the key standards you should ensure are in your process if you conduct DB transfer business, as well as strategies firms can employ to help mitigate risk. The next Great Pension Debate takes place on 7th and 8th November in Hendon, so if you are active in this area, it is well worth considering attending.

KEY FINDINGS FROM THE FCA’S FINANCIAL LIVES SURVEY 2017

On 20th June 2018, the FCA published the findings from its first large-scale survey of UK adults. Based on nearly 13,000 face-to-face and online interviews, Financial Lives is the FCA’s largest tracking survey of adults and their finances. It reveals a wealth of information about different types of consumer and their experiences of over 90 different financial products and services, so is well worth a read, especially as it will be used as a key source of information that underpins the FCA’s consumer protection work. It can be expected that the FCA will continue to focus on vulnerable clients, given that 50% of those surveyed displayed one or more characteristics that would indicate a potential vulnerability, such as limited financial resilience, low financial capability, suffering a recent life event (such as redundancy,

bereavement or divorce), or a health-related problem that significantly affects a person’s day-to-day activities. The FCA will repeat the survey every two years in order to gain insight into trends and improvements which occur. You may wish to use some of the key points from this first survey to inform your marketing campaigns therefore and target your services accordingly – they are summarised for you in our July edition of Regulation Matters. As part of our service, we will continue to keep you informed of what is on the horizon and provide guidance to help you remain compliant, both via our Regulation Matters monthly bulletin and ad-hoc updates on breaking regulatory news, as well as our various professional events throughout the year.

6 – SPECIAL FEATURE

Six things you need to know about the Insurance Distribution Directive (IDD)

WHAT IS THE IDD? The IDD replaces the Insurance Mediation Directive (IMD) and comes into effect from 1st October 2018. It aims to: • Create a level playing field across all participants selling insurance products and ensure consistent standards for intermediaries. • Raise conduct standards, increasing transparency and fairness, enhancing consumer protection and promoting competition.

WHO DOES IT AFFECT? The IDD applies to all businesses involved in the insurance supply chain. This includes intermediary firms, product manufacturers and online distribution, such as via a website or other media like price and product comparison sites. In short, if you play a part in putting insurance in the hands of a consumer, the IDD is of relevance to you.

 WHAT DOES IT MEAN FOR MY BUSINESS? In the UK, the standards of insurance distribution tend to exceed those on the continent. In regulatory language the UK is “super equivalent”. What this means is that UK insurance businesses, both manufacturers and intermediaries, have less to do to achieve compliance with the new higher standards than some of our European colleagues.

SPECIAL FEATURE – 7

of records with a named member of staff responsible for maintaining these records.

As a result, the impact in the UK is not as significant but there are small changes in a number of areas that firms will need to address. For example, a new rule is being introduced requiring that all products offered must be consistent with the client’s demands and needs. This should of course be happening already but the new rules mean that prior to the conclusion of a policy, the adviser needs to specify, on the basis of the information obtained from the client, the demands and needs of that client. In effect this means that you need to ensure that the demands and needs statement or financial report is personalised to the client’s specific needs. A generic statement of demands and needs without some matching of an individual client’s needs to the product offered is not sufficient. However, the FCA does not expect non-advised sales to go beyond the client’s high-level demands and needs. So whilst the new provision is fairly similar to current requirements, the IDD firms up the regulator’s approach to the process. Firms which provide a personal recommendation i.e. advise, are required to provide a personal explanation as to why the proposed product would best meet the client’s needs and should also highlight any unmet needs. Again, we would expect firms to be doing this already as part of good practice. However, don’t worry as we have signposted all relevant changes for you and because implementation was delayed from February this year, you may have actioned some of these already.

The implementation date of 1st of October is obviously not going to align with many people’s CPD year, so the answer is to simply pro-rata the requirement for the remainder of the current CPD year from 1st October. Therefore, if your CPD year starts 1st January therefore, you will have 3 months left of the CPD year when the requirement comes in, so you’d need to fit in three and ¾ hours of insurance-based CPD before the end of the year (and you may have already completed some relevant hours earlier in the year that you can log).

HOW DOES THE IDD AFFECT INSURANCE- BASED INVESTMENT PRODUCTS (IBIPs) Insurance based investment products

(IBIPs) are insurance products which offer a maturity or surrender value and where that maturity or surrender value is wholly or partially exposed, directly or indirectly, to market fluctuations. In simple terms, the IDD applies MiFID2 standards to IBIPs which are not themselves MiFID investments. This means you will need to apply the ongoing cost disclosure and aggregation of charges processes to investment bonds as well as OIECS, unit trusts etc. - you may have to provide part year’s figures from 1st October therefore to align with the annual review schedule for your clients, in the same way as you may have done for MiFID investments. Essentially, treat an investment bond like an OEIC from an ongoing cost disclosure and service perspective from 1st October. There are a limited number of products in the IBIPs definition that advisers use, but endowments and other unit linked savings contracts would be caught. We have had quite a few queries about whether a personal pension that’s been written as a ‘contract of insurance’ is an IBIP. It doesn’t fall under this definition but the pre-sale suitability report requirement applies as they are a ‘life policy’. Ongoing cost disclosure in terms of pensions is also strongly recommended (where available) to meet the information needs of clients, in terms of their whole portfolio and maintaining a single consistent process, rather than leaving the client wondering why they got information on the rest of their investments but not their pensions. All of our IDD-related support is stored within a dedicated area of the Compliance Support section of the extranet, so please keep an eye on this in the run up to October. So far, we’ve hosted a dedicated webinar, which you can watch on demand, plus sent out a comprehensive IDD guide and checklist, which we hope you have found useful.

WHAT’S HAPPENING WITH DISCLOSURE AND REMUNERATION? These are really linked together, on the basis that where you operate a remuneration model that includes an incentive arrangement which rewards, at least in part, volumes of sales of insurance products, then the existence of this arrangement needs to be disclosed to the client. We communicated the updated initial disclosure templates with appropriate wording last year, with a view to the original implementation date of February 2018 - if you haven’t already done so, you will need to make minor updates to your initial disclosure documents in terms of your non-investment insurance services. From a remuneration perspective, you must disclose the nature and the basis (fee, commission or combination etc.) of remuneration received under an insurance contract and this is applicable to all clients, not just commercial. All firms must disclose fees payable by a client in cash terms or if it’s not possible for an amount to be given, you must give a basis for the fee calculation.

HOW DOES IT AFFECT MY CPD REQUIREMENT? The IDD brings in a requirement for 15 hours of continuing professional development for anyone distributing insurance products – which means that whether you advise, arrange, paraplan or help manage claims or complaints in connection with insurance, you need to complete 15 hours of CPD a year. This does not have to be structured although that counts too, but it does have to be relevant to the role being performed and to support competence in that role. Advisers are already used to fulfilling a 35 hour CPD minimum requirement, so you just need to ensure that 15 hours of the 35 is insurance focussed. However, this may well mean that additional people in your firm are now required to log CPD who have never been required to before. Directly authorised firms will need to keep a central record of CPD progress in respect of the insurance related CPD requirement - this would need to cover all affected staff and would need to hold a rolling three years’ worth

8 – MEET THE TEAM

Meet the new TS&R Team

Technical Services & Research (TS&R) provide support services to our Select firms in a number of areas such as: • Technical helpdesk – technical queries on pensions, investments and protection, tax and trusts, advice process queries. A one stop point of support so that advisers can obtain the information they need in a timely and efficient manner. • Panel construction and maintenance to remove the burden from advisers by filtering the whole of the market so advisers can focus on selecting a solution to meet client needs. • Specialist investment support and approvals so an adviser can proceed in confidence with any recommendation relating to these more complex products. • Technical guidance and bulletins to allow advisers to focus on what they need to know and when they need to know it. • Guidance on the financial planning process.

• Mortgage research queries and help with complex and hard to place cases Recent developments at Tenet has seen the non-investment technical support function merged into the wider TS&R team with the aim of supporting our advisers further with mortgage and general insurance queries. We welcome Samantha Gray and Bryony Morris into the team. Both will bring their extensive knowledge of the mortgage and general insurance markets, thereby increasing the technical support we offer as part of the Technical & Research Module. Sam commented, “The integration of the Mortgage & Protection Helpdesk in to the wider TS&R team will enable us to enhance the service we offer to our members. The additional resource and expertise will help us to increase and improve upon the information and advice we provide, which will naturally make for a better member experience.”

Let’s introduce you to the new members of the team

Samantha Gray Technical Services & Research Consultant, CeMAP & CertRBCB Sam joined Tenet in January 2016. Her primary role is helping members place tricky mortgage cases and keeping the mortgage research tables up to date. Sam also reviews the Tenet lending proposition to ensure it is robust and to ensure advisers have access to all the lenders required. Previously Sam was a mortgage adviser, then a bank manager for 15 years for Lloyds Bank, C&G and finally TSB. Sam has 2 young children and loves a good karaoke session despite her lack of singing ability (her words not mine!)

Bryony Morris Trainee Technical Services & Research Consultant Bryony joined Tenet in November 2016 as a >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44

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