Mortgage Advice Bureau (MAB) believes the Financial Conduct Authority’s (FCA) pending pure protection market study will trigger a wave of consolidation which it intends to take advantage of.
The intermediary expects the review to “accelerate the need for and pace of” consolidation in the protection market and that it will be more aggressive in seeking to acquire available firms.
It made the statement alongside its interim results which also showed protection and general insurance (GI) revenue had equalled that from mortgage procuration fees during the first half of the year.
However, profit fell by 40% which was largely attributed to an expected £1.1m loss for redemption liability from clawback of protection products.
Discussing the FCA’s pure protection market study it said: “Good customer outcomes have always been, and continue to be, central to MAB’s strategy and culture, and we see this as a positive initiative for the market and that clearer governance is complementary and supportive of our objectives as a group.
“As with Consumer Duty, we agree with the raising of standards across our sector, and that through raising the bar, in the medium to longer term this only accelerates the need for, and the pace of, market consolidation.
“We will ensure that MAB continues to be optimally positioned firstly to continue doing the right thing by customers, but also to maximise this market consolidation opportunity.”
Protection revenue and clawbacks up
Notably, the firm saw protection and general insurance revenue equal that of its mortgage procuration fee income during the first half of the year.
The adviser reported a near 9% rise in insurance commission revenue compared to a year earlier, taking it to £48.8m from £44.9m over the six-month period.
In contrast, income from mortgage procuration fees was largely unchanged at £48.8m – up just 0.8% from £48.4m 12 months prior.
“We have seen improved protection volumes as our advisers focus on improving customer outcomes by aiding them to better protect the biggest investment of their life, their home,” it said.
“The resulting impact has led to higher protection volumes and attachment rate to mortgages resulting in 8.6% growth in protection and GI revenue in H1 2024 compared to H1 2023.”
MAB also collects fees from clients for some advice solutions.
It noted these increased by 9.5% to £24m due to growth in the overall number of more complex specialist mortgages leading to a higher attachment rate of client fees.
Overall, revenue rose by 5.4% to £123.9m from £117.5m with mortgage procuration fees and protection and GI commission accounting for 39% each, and client fees 19%.
Profit after tax for the period fell by 40% to £3.85m from £6.43m, which was largely attributed to the expected £1.1m loss relating to the redemption liability from clawback by insurers.
This was in contrast to a £3.5m gain over the same period last year.