The Consumer Duty is leading to increased adviser engagement with protection insurance, with 41% admitting they are having more protection conversations as a result of the Financial Conduct Authority’s (FCA) regulations.
This according to Association of Mortgage Intermediaries (AMI) fifth Protection Viewpoint Report which surveyed 3,000 UK adults and 308 advisers in August, which also found consumer interest in protection is growing.
The research also found 31% of advisers polled reported that they were now discussing a broader range of protection products. This was up from 24% in 2023.
The report, developed in partnership with Royal London and Legal & General, explored themes including service standards, the impact of Consumer Duty, how customers review their protection needs, and perceptions of the advice process.
The study, entitled Making Protection Personal, which surveyed 3,000 consumers and more than 300 advisers, also found 41% of advisers believed that Consumer Duty has improved the quality of consumer outcomes.
It also said there was a shift in consumers taking a greater lead in raising protection with their mortgage adviser.
A fifth (21%) of those who took out a mortgage through a broker asked them about protection, compared to 11% in 2023.
Four in 10 (44%) said their adviser raised protection with them compared to 50% in 2023.
Initial key findings from the study included:
- Gen Z (born between the late 1990s and early 2010s) interest in protection – 65% of young (gen Z) consumers view income protection as important and 13% have it, compared to 48% and 5% of gen X (born between the mid 60s and 1980)
- Adviser interaction: 29% of protection policyholders sought advice. Of this group, 34% recognised it as advice because it was delivered face-to-face (rising to 56% among boomers – born between 1946 and `1964), 22% because they “spoke to someone”, and 21% based on the adviser’s title
- Timing of protection discussions: 15% of those who did not take out protection with a broker said earlier conversations about protection may have encouraged them to do so. More advisers now introduce protection in the fact-find (38%) than at the introduction (36%).
Robert Sinclair, CEO at the Association of Mortgage Intermediaries, said: “This year’s report, titled Making Protection Personal, highlights the importance of focusing on the customer’s individual needs and goals.
“Over the past five years, we’ve gathered important insights, and we’re excited to share actionable ideas to help firms and advisers overcome the barriers identified in our study.
“We encourage everyone to join us on November 5 to hear more about these insights and learn how they can grow their business.”
Rachel Lummis, mortgage and protection adviser, Xpressmortgages, said: “With the eagerly anticipated AMI protection viewpoint report just weeks away from being launched the initial key findings will be warmly welcomed.
“There has been a marked rise in advisers having more protection conversions and introducing a wider variety of products, as well as an increase in the occasions where consumers are raising the question of protection with their advisors, showing they are very much open to discussions.
“These insights are going to shine a light on the opportunities available to advisers in the protection space and the full report promises to deliver.”
Carrie Johnson, protection director at Royal London, said: “The Consumer Duty really is emerging as a game changer for customers.
“We are already seeing an increase in the quality of advice, products and ongoing service and I think we have yet to see its full impact.
“Coupled with increasing interest in protection among younger people, and the change in how advisers are making it a more integral part of the advice process, we will undoubtedly see better outcomes for customers and more opportunities for advisers.
“It’s now up to us as an industry to maximise this opportunity for all.”
Vikki Jefferies, market development director at Legal & General Retail, added: “The upcoming report highlights the great work and progress that we’re seeing, but also some key learnings and areas of opportunity.
“Tailoring protection to individuals is crucial for meeting the varied needs of modern consumers.
“Importantly, The AMI Protection Viewpoint Report not only offers essential insights, but it also equips advisers with strategies to help them better serve their clients and further improve industry engagement.”