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Meeting your Consumer Duty obligations – how we can help

Meeting your Consumer Duty obligations – how we can help

While the origins of the FCA’s Consumer Duty were very much driven by the need to address the Protection Gap, responding to Lord Sharkey’s proposal to the introduction of a direct right of action against anyone who sold a mortgage without protection, much of the regulator’s activity so far has been on focused on wealth advisers’ implementation. A crucial question is when will the FCA start a process looking at protection, in line with their action in the wealth market last week?

For anyone who may have missed it, the FCA wrote to the 20 largest firms in the country seeking information on how these firms address client reviews. Given such work typically accounts for over 75% of a wealth advice firms income, that’s clearly a great way to grab everybody’s attention.

It has been apparent for a while that the regulator is keen to compress adviser charging. I think it’s fair to say that when they implemented Retail Distribution Review, they did not expect firms to adopt charging structures that were virtually identical to the 3% + 1% that applied in the old commission world. While in the immediate aftermath of RDR many firms moved to a similar model, in my experience this has evolved over time with Product Intervention and Product Governance Sourcebook (aka PROD) and the Senior Managers Regime prompting many firms to build different structures.

In my view  the whole advice guidance boundary issue is seeking to address something that market forces and particularly technology is already starting to address, and if left alone will resolve itself in the next few years. Personally, I am against any dilution of the boundary, I think we should keep existing consumer protection advice and require other channels to raise their standards but that is a subject for me to explore in another place.

So back to protection, with a follow through from the FCA on protection Consumer Duty implementation looking inevitable what are the key issues advisers should be addressing? 

The most significant impact for anyone giving protection advice must be that the basis on which they should make recommendations have effectively been turned on their head. Historically protection advice has been heavily weighted towards identifying the lowest possible premium. Indeed, for many years the Financial Ombudsman Service has required that any adviser recommending anything other than the cheapest contract should clearly demonstrate why they have chosen anything that is higher premium.

The FCA have now told the industry that the primary measure now is value. This is certainly something that cannot be ascertained by price alone. Most of the industry quotation and research technology has been built to focus on price comparison. Indeed, one of the main reasons I founded Protection Guru was because I did not believe advisers were being provided with all the tools and information needed to give advice that was based around more than just price. A protection price war helps no one, including consumers, as invariably the quality of cover gets eroded to keep reducing premiums.

For well over a decade, insurers have been focusing on delivering better and better quality protection products. Those on offer today are generally significantly superior than they were a decade ago, wordings are generally broader, and cover includes many add on benefits that turn protection plans from something that provides for a catastrophe to a contract that also brings valuable benefits they can use year in, year out.

I believe the FCA is taking an eminently logical approach to this subject. When you are choosing life insurance and other protection plans to look after the people you care about the most, it must make sense to buy a really good plan, rather than the cheapest. Indeed, research with Protection Guru Pro users has validated this. When given the chance to choose between the cheapest product or a better one, 85% of consumers are happy to pay a little bit more to get better value.  

The new rules do mean is that if, as an adviser, you are still just providing price comparison quotes and have not put in place a separate mechanism to assess value you are probably not meeting what the FCA require. 

To meet this need Protection Guru has a simple solution, Protection Guru Pro can enable you to generate a value-based assessment including both quality and price in as little as two minutes, thus meeting your value assessment obligation.

Further good news is that, because as demonstrated, above most clients will opt for a better plan when shown a value-based assessment so the software will pay for itself. Our experience is that the average client pays £6 per month for a better plan but advisers only need to increase one policy by £2 a month, based on typical commission rates, to cover the monthly cost of the service.

Protection Guru Pro can produce value-based assessments for Life and Mortgage Protection, Income Protection, Critical Illness, Family Income Benefit and Business Protection plans.

Another obligation under Consumer Duty is to ensure consumers receive the information they need “at the right time”. This obviously creates a challenge when clients make medical disclosures, which can raise two issues, how do you know which insurer will be most competitive with nonstandard terms and how can you get an answer quickly.

UnderwriteMe enables advisers to go through a single online submission process to obtain client specific prices from multiple insurers, typically in around twenty minutes, rather than having to wait the weeks or even months it can take to go through a more traditional underwriting process or the need to go through each individual insurer’s online new business process.

The time saving for the adviser is substantial and it must be said the UnderwriteMe application process is far more user friendly than most insurers. We believe the combination our propositions represents the most comprehensive, cost effective and compliant solution for advisers to meet their Consumer Duty obligations.

This is a view shared by Mark Cracknell, UnderwriteMe Commercial Director “Jointly UnderwriteMe and Protection Guru, have launched a unique sourcing platform for all life insurance products. We have removed the existing complications for advisers in researching individual customer product, pricing and underwriting requirements. Recognising the focus of Consumer Duty, in offering customer choice and evidencing that customers understand how the product, underwriting and pricing of a protection product is aligned to their needs.

This offers a single sourcing journey providing:

  • market leading product analysis, based on customer
  • seamless data transfer across platforms.
  • Underwritten terms across life, critical illness and income protection
  • Customer comparison showing their individual protection product, underwriting and pricing options.”

Hopefully the above is a compelling argument for you to want to know more about Protection Guru Pro and how it can help you meet your Consumer Duty obligations, if so please come along to one of our regular demonstration sessions which you can register for from this link

About The Author


Ian McKenna is the founder of Protection Guru. A 40 year veteran of the financial advice and related technology markets. Having worked for insurance and financial advice firms in 1995 he set up Financial Technology Research Centre, which publishes Protection Guru over a decade before “fin tech“ was recognised as an industry term. He believes passionately that far more people can be protected by life insurance and related contracts if we can demystify these and make objective comparative information on policies more accessible.

1 Comment


    Ian i totally agree with your comments having been in the industry for 41 years myself and done both wealth and now be it part time protection, now have a vast knowledge of what you are saying
    note Aviva and legal and general are not on underwrite me which indeed does not help, and the former their underwriting is to be frank strict, and no doubt driven by critical mass and reinsurers, and in my opinion is what the regulator could look at. but probably will not
    Its all about good customer outcomes
    The fact they offer Global treatment is a huge driver for recommendation for obvious reasons, and products superb, no problems here

    Another issue to highlight something you probably do not cover on protection guru is how friendly societies view declared conditions
    I am currently looking for income protection for a 55 year old self employed groundworker own business.
    he wants £2000 month with deferred period of 4 weeks, and i feel the following shows what consumer duty is all about
    So 30 months ago he suffered gout in his big toe and all insurers approached including friendly societies put an exclusion for gout arthritis and any related surgery. effectively meaning unless accident would not cover him for arthritis and hip replacements etc under the 4 or 5 year rule whichever insurer you use.
    Exeter British friendly shepherds all the same however Holloway would rate the premium by 40% and there will be no exclusions absolutely.
    the client did not take anytime off work 30 months ago and since he takes 1 tablet a day for precaution and lives a healthy lifestyle no blood pressure cholesterol or other health issues
    My client is prepared to pay that Holloway 40% going forward taking him up to age 70
    now the regulator cannot fault that advice.
    And also what the fca in my opinion are moving towards is an advice fee which is unbelievable because no one wants to buy protection it has to be sold
    and people will not under any circumstances pay a fee they will go online and do it themselves cheap and not good either
    Mortgages are different everyone wants these
    Simple answer all mortgage providers should insist at the very least that people always have the income FROM OUTSET to pay the mortgage if they become ill or die and regulator could solve this although some exclusions would apply, but will they ever do this absolutely not


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