Advisers ready to tackle ‘devilishly difficult’ ECJ ruling

Advisers are preparing immediate mail-outs to clients to warn them of the impact of today's ECJ ban on gender-based insurance pricing.

The ECJ ruled it is discriminatory to use gender as a factor in insurance pricing, which is due to hit male annuity clients particularly hard. Its ruling will be effective from 21 December 2012.

The longer term implications of the ruling are still uncertain but many advisers are keen to write immediately to their clients to explain the situation and suggest an urgent review of their options.

Jason Witcombe, director at Evolve Financial Planning, comments: "The ruling makes advising very difficult. I am writing to a female client who wants to buy an annuity now.

"She does not want to wait until December 2012; what do I do? We could get to 2012 and her annuity rate might have reduced then anyway. It is silly."

Alan Lakey, director at Highclere Financial Services, says: "It will be devilishly difficult to advise, but I will write to clients telling them women's life assurance and men's health insurance will possibly go up.

"There is a degree of self-protection in doing this, as clients may say later ‘if you had told me this, I would have done that'.

"The FSA wrote to us last week telling us not to write to clients and alarm them, but I like alarming clients; they need to be warned."

Viv King, principal at VKFPA, says: "From a marketing point of view, every IFA should be putting together a letter to every single protection client to arrange a review. Anything that comes from government indicating a sea change is a marketing opportunity for IFAs.

"Providers will be massively competitive between now and the deadline and so advisers wil effectively be broking."

Godfrey Bloom, former IFA and UKIP MEP for Yorkshire and North Lincolnshire, says: "We might have a situation where annuities become too expensive. Then how are governments going to sell their gilts? Will we get to a point where annuity purchases are compulsory?

"We could end up with a situation where annuities are purchased from offshore, web-based advisers based in Switzerland or the USA.

"ECJ judges have missed the fundamental point. They tried to put a template of European politics into risk assessment; they do not believe in the actuarial concept of risk assessment."