In regulating the UK insurance where the sales process involves giving advice, the essential elements in a ‘private customer advised sale’ must be (a) on the advantages and disadvantages of the customer buying or selling, and (b) a particular insurance contract(s). Generic advice, e.g. recommending that someone should buy a household policy, would not fall within the definition of advice. See ADVISING AND SELLING STANDARDS.

The risk of liability attaching to the insured as a result of giving advice. Solicitors, etc., are liable when ‘negligent’ advice leads to financial loss. The risk is insurable under professional indemnity insurance. Advice for which a fee is normally payable is excluded under public and products liability insurances. Advice that is incidental to supplying a product or carrying out work is not excluded but any resultant loss will only normally be within public/product liability cover if the third party suffers accidental bodily injury or damage to property.

A financial adviser; representative; appointed representative.

FSA requirements laid down in ICOB which categorises sales into advised sales and non-advised sales. The former occurs where the customer is given an opinion or recommendation to buy or sell a specific non-investment insurance contract. The customer must be given a statement setting out the reasons for the recommendation as well as a demands and needs statement. Non-advised sales occur when the sales process only involves providing information and no advice. The customer must be given a demands and needs statement unless the policy is sold directly to a commercial customer. See ADVISING ON INVESTMENTS; ARRANGING INSURANCE.

A regulated activity which occurs when the person advised is: (a) an investor or potential investor, or is acting as agent for such a person; (b) in receipt of advice on the merits of doing any of the following (whether as principal or agent): buying, selling, subscribing for or underwriting a particular security or relevant investment, ((i) designated investment, funeral plan contract, pure protection contract, general insurance contract, or right to, or interest in, a funeral plan contract; or (ii) exercising any right conferred by such an investment, other than a pure protection contract, to buy, sell, subscribe for or underwrite such an investment.)