The Financial Conduct Authority (FCA) is not ruling out banning or capping loaded premiums on protection products and has admitted it ‘has concerns’ in the protection market.
The regulator has previously sought to distance itself from efforts to control commission or premium levels which are used to generate additional income for advisers.
However, FCA executive director of consumers and competition Sheldon Mills (pictured) told Health & Protection that all options were on the table in the regulator’s pure protection market study.
Asked by Health & Protection if the regulator will now be considering banning or capping loaded premiums, Mills replied: “It’s way too early for me to give any commentary on what the outcomes of that study will be, so I can’t directly answer your question.”
However he added: “Every aspect of the way in which premiums are charged will be on the table for us to review, so that will be part of our investigation.
“But I can’t be drawn on where that investigation will get to – it’s just started.”
‘We have concerns in that market’
Following-up, Health & Protection also asked Mills if the regulator was disappointed in the response by the sector to its interventions over the last two years, such as the Dear CEO letter sent to insurer leaders last year.
Mills replied: “You can take from the fact that we’ve launched the study, that we have concerns in that market.”
In August, the FCA announced it would be conducting a review into the operation of the pure protection market including commission structures such as loaded commission.
Health & Protection also reported on the issue of loaded premiums in April this year from its inaugural Protection Forum.
At that forum, leaders from major protection insurers called for the sector to have an honest conversation about loaded premiums and commissions, with one CEO saying they would be “delighted” if the FCA took action.
Speaking at the forum, Isobel Langton, CEO of The Exeter told delegates: “If the regulator wants to regulate it, then I think they should and I would be delighted if they did.”
It has been a key subject throughout the industry over more than two years.
In April LifeSearch chairman Tom Baigrie called for the ending of loaded premiums at the advice firm’s annual awards ceremony.
It was also a subject Health & Protection asked about upon the launch of Consumer Duty back in the summer of 2022.