ICOBS 5 Identifying client needs and advising

1. (1) In line with the Consumer Duty, a firm should take reasonable steps to ensure that a customer only buys a policy under which they are eligible to claim benefits.

2. (2) For the purposes of (1), at any time while arranging a policy and in good time before its conclusion, a firm should:

   1. (a) consider whether a customer meets any qualifying requirements to claim the benefits for the different parts of the policy, and will continue to meet those requirements throughout the term of the policy unless there is a change in circumstances; and
   2. (b) if not, inform the customer, including if just in relation to parts of the cover which do not apply,  

   so the customer can take a properly informed decision on whether to buy the policy.

3. (3) Throughout the term of a policy, where a firm is informed (including by customers), or reasonably ought to know, about a change in a customer’s circumstances which could affect their eligibility to claim benefits, the firm should inform the customer of the potential impact on eligibility, in good time, so the customer can make effective, timely and properly informed decisions.
4. (4) An example of where a firm reasonably ought to know about a change in a customer’s circumstances throughout the term of the policy is where the firm was aware of a customer’s age at the time of the conclusion of the policy and therefore reasonably ought to know when the customer will reach or has reached an age limit which could affect their eligibility to claim benefits under the policy. This could be relevant to the steps a firm would be expected to take under ICOBS 5.1.1G(2) and (3).

A firm should bear in mind the restriction on rejecting claims (ICOBS 8.1.1R (3)). Ways of ensuring a customer knows what he must disclose include:

1. (1)

   explaining to a commercial customer the duty to disclose all circumstances material to a policy, what needs to be disclosed, and the consequences of any failure to make such a disclosure;

2. (2)

   ensuring that the commercial customer is asked clear questions about any matter material to the insurance undertaking;

3. (3)

   explaining to the customer the responsibility of consumers to take reasonable care not to make a misrepresentation and the possible consequences if a consumer is careless in answering the insurer's questions, or if a consumer recklessly or deliberately makes a misrepresentation; and

4. (4)

   asking the customer clear and specific questions about the information relevant to the policy being arranged or varied.

A firm may obtain information from the customer in a number of ways including, for example, by asking the customer questions in person or by way of a questionnaire prior to any contract of insurance being proposed.

ICOBS 5.2.2BR applies whether or not advice is given and in the same way regardless of whether that contract is sold on its own, in connection with another contract of insurance, or in connection with other goods or services.

Once the firm has obtained information from the customer and ensured the contract of insurance is consistent with the demands and needs, the format of a statement of demands and needs is flexible. Examples of approaches that may be appropriate where a personal recommendation has not been given include:

1. (1)

   providing a demands and needs statement as part of an application form, so that the demands and needs statement is made dependent upon the customer providing personal information on the application form. For instance, the application form might include a statement along the lines of: "If you answer 'yes' to questions a, b and c your demands and needs are those of a pet owner who wishes and needs to ensure that the veterinary needs of your pet are met now and in the future";

2. (2)

   producing a demands and needs statement in product documentation that will be appropriate for anyone, for whose demands and needs the contract is consistent. For example, "This product meets the demands and needs of those who wish to ensure that the veterinary needs of their pet are met now and in the future"; and

3. (3)

   giving a customer a record of all his demands and needs that have been discussed

1. (1)

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

   1. (a)

       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 or policies in which the customer is interested;

   2. (b)

       take 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)

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

2. (2) [deleted]