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Will consumer duty help the UK life insurance industry?

Journalist: Protection 1st, Freelance

ended 31. October 2023

The Association Of Mortgage Intermdiaries ‘Viewpoint’ reported that in 2020 only 36% of consumers could recall a Protection conversation with their mortgage adviser

with FCA consumer duty now part of our day to day, if that same survey was conducted in 2024 would this % be any different and if so what are the main factors as to why? 

11 responses from the Newspage community

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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
We all know clients have varying recollections of events, but usually, they become crystal clear when it comes to complaints. Following the roll-out of Consumer Duty, and in particular the prevention of foreseeable harm, the protection conversation needs to be improved by many. We have always had obligations as financial professionals to highlight risks to customers and present them with appropriate solutions. The skill in this is to make conversations client-centric, about their exposures, their problems, and their risks, rather than leading with the product itself. Many customers have had previous experience with crude sales processes and perceive your discussions as a repeat. Protection needs to be positioned as a core part of financial planning, rather than a secondary sales exercise.
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Michelle Lawson
Director at Lawson Financial
In short it should but it won't. Most people think they are invincible and we are a nation of corner cutters. We are not permitted to use 'scare tactics' as such when advising on these products but the truth is that being without an income, seriously ill or you or your partner dying can, in most, cause a severe financial impact and the loss of the roof over your head. People are reliant more on others than themselves citing 'family will help' or 'I'll sort later' but they just never get round to it. Cost is a big factor on household budgets but the public have been only programmed to own their own home and to not protect that asset. This is what needs to change.
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Simon Bridgland
Director at Charwin Private Clients
Consumer Duty will change the way firms provide advice, the new rules have only just come into effect over recent months so time will tell. A good proportion of the cases where clients cannot recall a protection conversation could be blamed on advisers not wanting to arrange a product which could have commissions clawed back or take a long time to get underwritten. That said, some clients are certainly not thinking logically when arranging mortgages, with many simply refusing to discuss cover. It's often seen as something they don't want to pay for if it's not mandatory. Some clients see the role of a broker is to get them a mortgage to ultimately get the house they want, often with just a passing thought given to any discussion with the adviser about insurance. Advisers need to protect themselves when advising clients, by documenting any discussions they had using the client's own words. With the blame culture in full swing, a belt and braces approach to adviser evidence is needed.
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Imran Hussain
Director at Harmony Financial Services
The introduction of consumer duty should make protection conversation come to the forefront of any interaction with a client but most advisers will come across clients who simply put it off or think they are invincible until something wrong.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Sadly I don’t think this will have changed in the stead of consumer duty. Those who have been avoiding discussing protection with their clients clearly didn’t care about their clients and that won’t change based on fca policies. At least not until some start getting dragged over the coals and banned by the FCA, but it is likely that the FCA will not do enough to enforce the ideals of consumer duty.
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Darryl Dhoffer
Founder at The Mortgage Geezer
I believe that the percentage of consumers who could recall a protection conversation with their mortgage adviser would be higher in 2024 than it was in 2020. This is because the FCA Consumer Duty, which came into force in July 2023, places a greater emphasis on firms ensuring that their customers understand and are able to make informed decisions about the financial products and services they are offered.

Firms will be required to have a better understanding of their customers' needs and objectives. This will help them to identify the protection products that are most relevant to their customers and to tailor their advice accordingly.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
The Association of Mortgage Intermediaries has re-run the survey each year and will be doing it again in 2023 (it's released on the 8th of November), so it is something that can be tracked over time to see if advisers are now having more memorable conversations with clients. The other part of this statistic was that over 90% of advisers said they did have a protection conversation, so there was a huge mismatch between client and adviser recollections, meaning the conversation may have happened but was in no way memorable for the client. Now in the world of Consumer Duty, would this change? Potentially not, it would still be possible to have a conversation and record that conversation happened (so satisfying the rules), but for that conversation not to be memorable or engaging to the client. The onus is on advisers to find their voice and present insurance in a way that really lands with the client and makes them think, not for it to be just a box to be ticked during the meeting.
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
Alas, I think we still have a way to go to get many advisors to realise that protection isn't an afterthought but a core part of their advice process. Until advisors start to talk about protection from the very first appointment in a way that involves their customer properly, those numbers won't shift.
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Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
There has always been a professional responsibility to take care of the best interests of clients. It's clear, however, that there is wide variation in how this has been applied in practice. 

It is easy for consumers to look at insurance as a luxury rather than a necessity. It's a subject they often say they will ‘get round to.’ Sadly, for many who’ve continued to ‘kick the can down the road,’ the consequences have been dire. 

The Covid pandemic has made people all too aware of the unforeseen risks and catastrophic effects of being unprepared. The new consumer duties should help standardise practice across the board bringing greater peace of mind to many.
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Gary Bush
Financial Adviser at MortgageShop.com
Protection conversations are tricky and always have been, the UK general public, unlike the US, seems to view life insurance products as costly and with no value for money. I think a lot of this is caused by banks' relentless past marketing campaigns for life cover that usually ended in huge and bank commission-inflated monthly premiums. The only way to review your life insurance and protection needs is to seek out an independent and impartial financial practice that won't add in excessive commission terms, like a lot of banks, and will provide a whole market view of what all insurance providers can offer you. Covid has brought these conversations closer to the table with clients however it's clear that more positive work needs to be done to demonstrate the importance of budgeting for life cover and protection to ensure adequate planning is in place.
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Sandra Feuell
Director at Feuell4Life
I have found that protection is now taken much more seriously since the implementation of consumer duty in 2023. I have been a protection only adviser for many years and over the last few months, I have had 7 new mortgage advisers passing the clients across to me to arrange the protection.
I expect that the number of consumers who can recall a protection conversation will have increased significantly.
Consumer Duty has had a positive impact.
I have believed in the importance of protection for many years and I am pleased that the FCA has now emphasized the importance of protection for all consumers of financial products.
However, I still believe that it is important that consumers receive the right advice. A fully advised protection recommendation for all needs is so important. It is easy to just discuss life cover when the likelihood of serious illness is a much greater threat.
Timing is also imperative. It should be an integral part of any financial advice and not an afterthought