Understanding category 1 and category 2 productsThe new legislation has categorised financial products into two categories (Category 1 and Category 2), and sets out which type of adviser is qualified to advise and sell. Many advisers are wondering if the products they sell or have on their books are Category 1 or Category 2 products.
CATEGORY ONE PRODUCTS have more of an investment focus and include securities, land investment products, futures contracts and investment-linked insurance contracts (other than life insurance policies issued before 1 January 2009).
They can be sold by Authorised Financial Advisers (AFAs) and, if the QFE is the Issuer or Promoter, the Nominated Representatives of the QFE.
CATEGORY TWO PRODUCTS are less complex. They include bank term deposits, bonus bonds, call debt securities, shares in co-operative companies, a unit in a cash or term portfolio entity, insurance contracts and life insurance policies issued before 1 January 2009.
They can be sold by Registered Financial Advisers (RFAs), AFAs and Nominated Representatives of a QFE.
Sovereign has compiled a categorised list of its products to help advisers with understanding Sovereign products, both open and closed. This list is not exhaustive and will be expanded regularly until complete.
Click here to access an update of Sovereign’s categorised product list.
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