Incoming regulation and a steep decline in marriages mean it has never been more important for advisers to ensure protection policies are properly set up for cohabitee partners, according to consultant Johnny Timpson.
Timpson (pictured) highlighted latest figures from the Office for National Statistics (ONS) published this week which confirmed the number of marriages in England and Wales had halved from 1972 to 2019.
And he warned that the Financial Conduct Authority’s (FCA) incoming Consumer Duty rules would further increase the scrutiny on advisers to address the needs of unmarried couples.
Onus on the adviser
Timpson emphasised the Consumer Duty and 50% decline in marriages over the past 50 years means it has never been more important for advisers to ensure protection policies were properly set up for cohabitee partners.
Speaking to Health & Protection, Timpson said it was vital advisers set up protection policies properly due to the FCA’s proposed rules around support outcomes contained in its Consumer Duty.
“The support outcome is making sure that you deliver a really good service,” Timpson said.
“A really good service means that if you are setting up a family protection policy you want the benefits on death to go to the partner they are in a cohabitee relationship with.”
Consequently, Timpson said the onus was on the adviser to ensure these policies were set up properly.
“Place the policy in trust,” he continued.
“And make sure the client’s got a will in place and frankly, in this day and age as a matter of course make sure the client has got lasting powers of attorney in place as well so that if they lose capacity then they’ve got someone who can act to take decisions for them because otherwise that gets really difficult.”
But Timpson added the Consumer Duty also requires advisers to “raise the bar” to ensure conversations with these customers are proactive.
“It’s not just a statement that we can report any longer,” Timpson continued.
“You should be challenging your clients in terms of ‘let’s review your financials’, and ‘let’s make sure that we do have proper review meetings down the track so if your circumstances change, not only do we update your cover but we make sure that your trust and your will and your LPAs are still appropriate as well’.”
Cohabitation laws
Timpson also explained that the figures highlighted the importance of fair cohabitation laws across the UK for those delaying marriage or choosing to cohabit – particularly where relationships end as a result of bereavement.
New laws are coming into force this September which will allow unmarried parents to claim working age bereavement benefits.
However, appropriate advice to ensure protection insurance and pension arrangements in particular were set up correctly, with trusts, wills and expression of wish letters reviewed was of vital importance.