LSL Financial Services has welcomed the Financial Conduct Authority’s (FCA) interim findings from its Pure Protection Market Study describing them as a clear endorsement of a market that is delivering good outcomes for consumers, while recognising that there is still more to do to close the UK’s long-standing protection gap.
The FCA’s interim report concludes that the pure protection market is working well in many respects, with high claims acceptance rates, low complaint levels and strong evidence that adviser-led distribution continues to play a central role in supporting consumers to access the cover they need.
Richard Howells, Group Managing Director at LSL Financial Services, says: “The FCA’s findings are an important and welcome recognition that the protection market is fundamentally doing what it is meant to do, delivering value, paying claims and supporting good consumer outcomes.
“Crucially, the regulator has also acknowledged the vital role advisers play in helping customers navigate what can be complex, emotional decisions, and in ensuring protection products are understood, appropriate and valued. With the work we have done on fair value and our plans to deliver integrated protection advice through our Novium sourcing system, we believe PRIMIS and TMA brokers are very well placed to be at the forefront of professional protection advice”
However, LSL says the interim report also underlines a persistent challenge for the industry: the ongoing protection gap. Current estimates suggest that 58% of UK adults do not hold a pure protection product.
Howells continues: “Protection remains a product that is sold, not bought. Very few people wake up wanting to buy income protection or life cover, in the same way they do not actively want a fire extinguisher or a seatbelt. But when the worst happens, those protections become invaluable.
“That is why advisers are more crucial than ever. They are the translators, educators and advocates who help people understand risk, relevance and value, and who turn and abstract product into something meaningful.”
LSL believes the FCA’s decision not to pursue widespread market intervention reflects confidence in the current adviser-led model, while creating space for the industry to focus on innovation, accessibility and awareness.
Howells concludes: “Innovation via technology has an important role to play as a tool to help advisers close the gap. It can improve access to protection products and remove friction from the process.”
“But the lesson from the current market is clear. Technology should take care of the process so advisers can focus on the person. Algorithms can assess risk, but they cannot explain why it matters.
“If we are serious about closing the protection gap, it will be advisers, supported by the right technology, who make the difference.”
