Life - Articles - Comment on FCA study of protection products to consumers


The FCA launched a new market study into distribution of pure protection products to retail consumers to discover if competition is working in the interest of consumers.

 If the distribution of pure protection products is working well consumers should be able, for example, to buy products and services that meet their needs, provide fair value, and supports them in making timely, well-informed decisions.

 Pure protection products are designed to help individuals, and/or their dependents, with existing financial commitments or lifestyle adaptations if the policyholder dies or becomes incapacitated, injured or infirm. They include term assurance, critical illness cover, income protection insurance, and whole of life insurance including both underwritten whole of life insurance and guaranteed acceptance over 50s plans.

 David Gray, Senior Consultant Actuary at Broadstone, commented: “Pure protection plays a critical role in our financial services ecosystem but it also delivers products that are implemented at times of extreme personal loss, distress and uncertainty in the case of death and serious illness or injury. It is really important that the protection sector is working well for consumers and that the selling of products like income protection and whole of life insurance is delivering fair value and comprehensive cover over a suitable term. While the FCA points to many current positive indicators and outcomes for consumers, it evidently has concerns around aspects such as commission arrangements and barriers to investment and innovation.

 “We note the changes to the terms of reference after listening to stakeholders including ‘work to develop a better understanding of the magnitude of the protection gap and its underlying causes’. We believe that a wider take up of affordable protection policies can greatly increase Societies’ financial resilience. The market study is in line with the regulator’s intense focus on value and fairness for the consumer. These objectives are crucial for building trust and ensuring that the system is working throughout the value chain.”

 FCA launches study on pure protection market providing value 

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