Kevin Carr looks at the fast-approaching Consumer Duty deadline and outlines three things advisers need to consider when thinking about protection…

When talking to protection firms about Consumer Duty you tend to get a confident response shortly followed by a gritting of teeth.

Recent research by iPipeline showed that 92% of advisers stated they were either confident or very confident their Consumer Duty strategy will be implemented by the deadline day, 31 July. However, compared with updates from the Financial Conduct Authority (FCA) and from other adviser insights across the industry – there seems to be a significant gap.

Speaking generally, it’s fair to say the protection industry is quite buoyant about the potential outcomes though. There is a widely held view that both borrowing and dying, as well as becoming unwell, are most definitely foreseeable harms that should be discussed and planned with clients at the earliest opportunity.

1. To do or not to do protection, that is the question

Whether or not financial advisers wish to write protection for all clients is contentious matter, although there are plenty of protection specialist firms queuing up to provide services to those who might need them.

Highclere Financial Services director Alan Lakey says any financial adviser who doesn’t properly address a client’s protection needs will be in breach of the new rules.

“Frankly, advisers can’t avoid protection anymore and it’s not good enough just to arrange some life cover. Appropriate protection including income protection, critical illness and family income benefit will need to be considered accordingly. Any adviser ignoring their client’s protection requirements could be in breach of their Consumer Duty requirements.”

LifeSearch chief operating officer Paula Bertram-Lax agrees. “Consumer Duty gives us one key objective as an industry which is to deliver good customer outcomes. Not discussing protection at all is surely off the table, but presumably so is driving up premiums to secure higher commission rates. Every aspect of the process, including evidencing the value of the policy and price, is essential.”

Lakey adds: “The requirements do not stop with the recommendation. Regular reviews will need to be carried out and recorded, which could highlight financial weaknesses or changes to the client’s situation that requires a review of their insurances.”

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