IPTM7730 | Personal portfolio bonds (PPB): ability to select property: broker bonds and investment advisers: circumstances where policy may be a PPB

Exceptionally, a policy may be a PPB even where there is a broker or investment adviser involved. The arrangements between the insurer and the adviser or broker, or between the adviser or broker and the policyholder, or in the case of a tripartite agreement among all three of them, could prove material.

The investment objectives of the policyholder in accordance with which the adviser or broker has to act may be so restricted that it is effectively the policyholder that is selecting the property held in the policy. In this case, the adviser or broker is no more than a conduit or agent through whom the policyholder gives the insurer its instructions. These may be instructions as to what new investments may be selected and, with a continuing policy, the scope and freedom for replacing investments by other investments.

The terms of the legislation cannot be avoided simply by interposing an investment adviser or broker between the policyholder and the insurer. An insurer may, however, not be aware of an arrangement between a policyholder and an investment adviser or broker. It is not the responsibility of the insurer, when deciding whether a particular policy is a PPB, to review anything other than the contracts to which it is a party.