1. (1)

   A firmarranging a payment protection contract must:

   2
   1. (a)

      2take reasonable steps to ensure that the customer only buys a policy under which he is eligible to claim benefits; and

   2. (b)

      2if, at any time while arranging the policy, it finds that parts of the cover do not apply, inform the customer so he can take an informed decision on whether to buy the policy.

2. (2)

   This rule does not apply to payment protection contractarranged as part of a packaged bank account.

   2

2A firmarrangingpolicies as part of a packaged bank account must:

1. (1)

   take reasonable steps to establish whether the customer is eligible to claim each of the benefits under each policy included in the packaged bank account which must include checking that the customer meets any qualifying requirements to claim each of the benefits under each policy; and

2. (2)

   inform the customer whether or not he would be eligible to claim each of the benefits under each policy included in the packaged bank account so that the customer can take an informed decision about the arrangements proposed.

2A firm must make a record of the eligibility assessment and, if the customer proceeds with the arrangements proposed, retain it for a minimum period of three years from the date on which the assessment was undertaken.

1. (1)

   32Throughout the term of a policy included in a packaged bank account, a firm must provide the customer with an eligibility statement, in writing,3 on an annual basis. This statement must set out any qualifying requirements to claim each of the benefits under the policy and recommend that the customer reviews his circumstances and whether he meets these requirements.

2. (2)

   3Where a customer has reached an age limit on claiming benefits under a travel insurance policy included in a packaged bank account (or will reach an age limit before the next annual statement is due), a firm must state this clearly and prominently in the statement and on an annual basis thereafter.

3. (3)

   3The statement (provided under ICOBS 5.1.3C R (1)) must not:

   1. (a)

      include any information other than that required under this rule; or

   2. (b)

      form part of another document provided to the customer by the firm; or

   3. (c)

      be included in the same mailing as any other document provided to the customer by the firm.

This section applies to:

1. (1)

   an insurance intermediary in relation to any policy (other than a connected travel insurance contract);1 and

2. (2)

   an insurer when it has given a personal recommendation to a consumer on a payment protection contract or a pure protection contract.

1. (1)

   Prior to the conclusion of a contract, a firm must specify, in particular on the basis of information provided by the customer, the demands and the needs of that customer as well as the underlying reasons for any advice given to the customer on that policy.

2. (2)

   The details must be modulated according to the complexity of the policy proposed.

1. (1)

   A statement of demands and needs must be communicated:

   1. (a)

      on paper or on any other durable medium available and accessible to the customer;

   2. (b)

      in a clear and accurate manner, comprehensible to the customer; and

   3. (c)

      in an official language of the State of the commitment or in any other language agreed by the parties.

2. (2)

   The information may be provided orally where the customer requests it, or where immediate cover is necessary.

3. (3)

   In the case of telephone selling, the information may be given in accordance with the distance marketing disclosure rules (see ICOBS 3.1.14 R).

4. (4)

   If the information is provided orally, it must be provided to the customer in accordance with (1) immediately after the conclusion of the contract of insurance.

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

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.

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.

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.