Tom Baigrie, boss of life insurance specialist Lifesearch, has questioned whether the Financial Services Authority (FSA) regulation of advisers works given so many consumers buy without advice online.

The FSA says online products are regulated and online sellers comply with regulations. But it accepts that many buyers just tick the box saying they have read the regulatory information without reading a word of it. Baigrie is right. And it is the most vulnerable who buy unadvised. The FSA is letting them down.

Baigrie said: " In 2010, seeking to regulate a financial services market without regulating its online outcomes is surely ridiculous.

Google

"The vast majority of consumers who set out to learn about any particular aspect of financial services will type the words they think most relevant into their Google search bar.

"And if you look at keywords such as life insurance, and critical Illness you'll find almost only non advised online sellers, and under Income Protection you'll find only the disgraced tribe of PPI sellers, wearing a subtle disguise.

"No matter their pros and cons, all of these provide a very different consumer solution from anything the Financial Services Authority (FSA) has ever sought to achieve.

Shrinking regulated share

"If ever more consumers do most of their learning from sites whose consumer solutions lie outside the regulated world, the FSA is regulating and protecting a rapidly shrinking proportion of all buying decisions each day.

"As this trend is continuing and accelerating, what is the point of having the retail firms side of the FSA at all? To be clear, I'm really not calling for more regulation, but I am wondering where the rise of non-advice online leaves a by-passed regulator?

FSA replies

The FSA responded, saying: "When people buy online they will still have gone through processes set down by the FSA. Even if people click a button to buy the product is regulated. They get given information before they click that button. By ticking the box they are saying they have read and abide by that.

"Whichever way you do your research, the disclosure process will have been in a way defined by us and you will have had to say yes to questions set by us. The whole process is regulated by us."

Tick box regulation

Different policies suit different people in different circumstances. These policies, their terms and the cover and speed of payouts they offer are complex. Choosing the cheapest is potentially disastrous. Tick box regulation is not enough.

Links (new windows)

Lifesearch
FSA