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ICOBS 5.3 Advised sales

Suitability

01/10/2018R

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

26/06/2026G

Where a firm provides advice to a customer in relation to a package which may include several policies, the firm should ensure the suitability of advice in ICOBS 5.3.1R in relation to each policy on which the firm is advising the customer.

Suitability guidance for pure protection contracts

26/06/2026G

  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]

Advice on the basis of a fair analysis

01/10/2018R

If an insurance intermediary informs a customer that it gives:

  1. (1)

    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; or

  2. (2)

    a personal recommendation on the basis of a fair and personal analysis, it must give that personal recommendation on the basis of an analysis of a sufficiently large number of insurance contracts available on the market to enable it to make a personal recommendation;

and in each case, it must be in accordance with professional criteria, regarding which contract of insurance would be adequate to meet the customer’s needs.[Note: article 20(1) third paragraph of the IDD]

Personalised explanation

01/10/2018R

Where a firm provides a personal recommendation (other than in relation to a connected travel insurance contract) the firm must, in addition to the statement of demands and needs, provide the customer with a personalised explanation of why a particular contract of insurance would best meet the customer’s demands and needs.

[Note: article 20(1) third paragraph of the IDD]

Means of communication

01/10/2018R

A firm must provide the information in this section in accordance with ICOBS 4.1A (Means of communication to customers).

[Note: article 23(1) of the IDD]