Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Solutions. Read the original article for full details.
FCA rules out protection intervention as industry hails 'not broken' market
The Financial Conduct Authority (FCA) has published the final report of its Pure Protection Market Study, confirming it will not use its powers to intervene in how protection is advised or designed. Instead, the regulator will work with providers and organisations, using the existing framework to review underwriting practices and product innovation, and to help advisers engage with consumers to raise awareness.
Industry figures said the FCA's decision to collaborate with the sector rather than enforce was evidence the protection market is not "broken".
Awareness is the weakness
Ewen Tweedie, actuarial director at Broadstone, said the FCA had "correctly identified" that the greatest weakness in the pure protection market was that millions of people never consider whether they need cover. He pointed to findings that nearly two-thirds of people never thought about protection.
Tweedie described this as a shift from a conduct viewpoint focused on value to a growth viewpoint focused on engagement, and said it was sensible to prompt customers during key life events. He added that the FCA's decision not to extend targeted support was understandable, as it would likely help people who were already engaged.
James Shattock, managing director of protection and retail retirement at Legal & General, welcomed the report's recognition that the market was delivering good outcomes, but said it was right that the regulator highlighted the need for more to be done to close the protection gap.
A vote of confidence in the market
Debbie Kennedy, chief executive of LifeSearch, said the final report showed the FCA had "looked hard at this market and backed it", calling it a vote of confidence in the protection market and a green light for growth. She noted there was a regulator focused on growth, with pragmatic Consumer Duty guard rails in place, and a shared recognition that the biggest challenge is closing the protection gap.
Rob Clifford, chief executive of Stonebridge, called it the most important regulatory review of the protection market for years, saying there were no findings of consumer harm or misselling and that the advice sector was delivering good outcomes. He said mortgage networks had a huge role to play, and that Stonebridge would continue investing in soft skills and technology to help advisers close the protection gap.
Chris Reed, growth director at Protect Line, said the findings gave the sector a strong foundation to build on, and that the sector should measure whether it is reaching people who had never considered their needs, whether they understand their options, and whether those who take out cover can sustain it.
What this means for intermediaries
For letting agents, inventory clerks and other property professionals whose clients rely on mortgage and protection advice, the report signals no regulatory disruption to how protection products are advised or designed. The focus now shifts to engagement: prompting customers at key life events and improving awareness of cover among the millions who never consider it.
Source: Mortgage Solutions