The Protection Distributors Group (PDG) has shed light on its market‑wide initiative aimed at addressing weak consumer engagement and understanding of protection.
It will begin with a mobilisation phase focused on governance, stakeholder engagement, funding principles, success measures, competition-law protocols and the first delivery brief.
The Financial Conduct Authority (FCA) revealed in its final protection market study report, published this morning that it has asked the PDG to lead the market’s key stakeholders in developing a market‑wide initiative aimed at addressing weak consumer engagement with and understanding of protection.
The purpose of the initiative is to enable more consumers to reduce their financial vulnerability by improving their understanding of protection and making it easier for them to engage with appropriate next steps.
Aiding consumer understanding
The PDG said the initiative should help consumers understand why protection may matter to them, what different types of protection are designed to do, and when protection may be relevant at different life stages.
It should tackle some of the critical elements in the sector including:
- how affordability, underwriting and claims work from the consumer’s perspective,
- how to challenge common misconceptions about protection, including misconceptions about cost, reliability and claims,
- and how protection can interact with trusts, nominated beneficiaries, wills, powers of attorney and wider financial planning.
It will also look at where to go next to explore appropriate options, obtain guidance or advice, and take practical next steps where protection is suitable.
But the PDG added its initiative should seek to engage all relevant consumer segments, while paying particular attention to groups that are currently under-engaged by existing market routes.
These are likely to include renters, the self-employed, gig-economy workers, younger households, parents, carers, people with limited savings, and consumers experiencing major life changes.
Measuring success
The PDG pointed out that the real test of success would be whether it improves consumer understanding, increases informed consideration of protection needs, supports better consumer journeys, reaches groups the market has historically underserved, and helps more people take practical and appropriate steps to protect themselves and their families.
Key performance indicators (KPIs) will also include campaign reach, website visits, media coverage, stakeholder participation and consumer interactions.
Consequently, the PDG said its first phase should therefore include work on a small number of proposed success measures.
It added these should be clear enough to guide funding, governance, delivery and review.
FCA expectations
The body noted the FCA had made clear it expects the market to work together with the PDG to develop a sustained programme of work rather than a one-off marketing campaign.
It has also made clear that robust governance will be essential, that market participants and other relevant stakeholders should engage constructively with the initiative, and that appropriate resources, financial support and active participation will be needed.
In terms of funding, arrangements should be agreed as an early priority and should be equitable, proportionate and sufficient to support professional development, launch, governance, measurement and sustained delivery.
The regulator has also called for all relevant firms and industry bodies to participate in and work through the governance structure PDG will establish, and that those arrangements should be agreed at pace.
The FCA has also indicated that senior FCA colleagues will participate in the governance arrangements in an appropriate capacity, including through director-level sponsorship.
That participation is intended to provide strategic challenges and help ensure alignment with the broader aims of the FCA’s protection gap remedies package, while responsibility for delivery remains with industry.
Proposed PDG response
For its part, the PDG made clear that its role is to provide leadership, urgency and practical direction.
But it said leadership does not mean ownership in isolation, adding while the initiative is FCA backed, and PDG convened, it must become industry-owned.
And it added that it recognises insurers and other potential participants will have legitimate questions before committing senior people, executive resources and, especially, funding.
These questions include what is the strategy? What outcomes are we trying to achieve? How will success be measured? How will decisions be made? How will governance be balanced?
How will funders have appropriate influence without the Initiative being controlled by any one firm or sector? How will the initiative remain neutral and competition-law safe?
Finally, how will it avoid becoming another well-intentioned but slow-moving industry forum?
The PDG intends to address these questions openly and early, and so has proposed to begin with a mobilisation phase focused on governance, stakeholder engagement, funding principles, success measures, competition-law protocols and the first delivery brief.
It said its aim is to create a disciplined process through which the right people can develop a serious and effective answer together.
Two linked bodies
To ensure robust governance, the PDG intends to establish two linked bodies.
This will include an executive group that will be formed to develop and deliver the programme.
This group will need to be small enough to act promptly, senior enough to be taken seriously, and expert enough to manage a complex market-wide programme. Its role will be delivery.
An oversight board will be established to provide strategic direction, accountability and challenge.
It will need a respected independent chairperson and selected members with the experience and authority needed to help the initiative hold the confidence of the market.
Both groups will be selected from across the industry and wider stakeholder community and will need to bring together people with expertise in protection, consumer engagement, distribution, governance, finance, marketing, risk, regulation, competition law and consumer outcomes.
Based on six principles
PDG said it wanted to work with insurers, reinsurers, distributors, advisers, trade bodies, consumer organisations, public-interest bodies and others in a spirit of genuine collaboration, adding its approach will be based on six principles – clarity, inclusion, balance, pace, discipline, and consumer focus.
To mobilise the sector, the PDG plans to ask insurers, distributors, trade bodies, consumer bodies, public-interest organisations and other relevant stakeholders to take four practical steps.
These include:
- appointing a senior lead for its engagement with the initiative,
- providing clear contact details for that senior lead,
- nominating exceptional individuals who could play a role on either the executive group or the oversight board,
- while organisations will be asked to provide an initial written response to this proposal, setting out whether they support the purpose and proposed direction of the initiative, headline issues not covered here they believe must be addressed during mobilisation.
The PDG said the executive group will need people to cover all normal exco functions with practical delivery capability, energy, judgement and relevant expertise. A team of around nine people will be responsible for developing and delivering the programme.
An oversight board of around 11 people including the CEO and one more of the executive group will need people with authority, judgement, and independent mind, pan-market credibility and the ability to provide strategic direction, accountability and challenge.
The PDG requests that both groups must be selected carefully, adding they cannot be representative committees in which every interested party has a seat, and will need the right blend of seniority, expertise, consumer focus, market reach, diversity, independence and ability to get things done.
Funding arrangements
In terms of funding, the PDG called for arrangements to be agreed as an early priority.
It will require professional marketing, consumer insight, behavioural research, digital infrastructure, finance, legal and governance support, measurement, reporting and ongoing optimisation.
The FCA has made clear that funding should be equitable, proportionate and sufficient to support the professional development, launch, governance, measurement and sustained delivery of an effective engagement programme.
The PDG said it also recognises that organisations, particularly insurers and other likely funders, will want a clear strategy, business case, governance model, decision-making process and set of success measures before committing significant funding.
It said the funding discussion should therefore begin early, but it should not be divorced from strategy. The first phase must connect funding to purpose, outcomes, governance and delivery.
Competition law and neutrality
As the initiative will necessarily involve competitors working together, the PDG said it will therefore need clear rules of engagement, proper governance, appropriate legal support and disciplined conduct from the outset.
It said it cannot discuss or coordinate commercial pricing, product terms, underwriting approaches, distribution strategy, individual firm conduct, commercial negotiations or any other matter that would be inappropriate for competitors to discuss collectively.
But it added that the initiative must also preserve neutrality and should not promote individual firms, products, brands or distribution routes. It should help consumers understand protection and find appropriate next steps, without becoming a disguised commercial lead-generation vehicle for any one part of the market.
As the initiative develops onward consumer pathways, those pathways will need to be transparent, fair, non-discriminatory and consistent with the Initiative’s consumer purpose.
They will need to preserve trust and avoid any perception that consumer education is being used to directly favour commercial participants or undermine consumer confidence in any one part of the market.
Consequently, the PDG will seek early advice on the competition-law and neutrality framework within which the initiative should operate.
It expects this to include meeting protocols, information-sharing rules, governance terms, conflict-management procedures, rules for consumer-facing neutrality, and appropriate oversight of any future consumer pathway design.
First 120 days
The PDG said it expects the first 120 days to focus on a number of areas in its establishment work.
These include:
- receiving formal responses, senior lead details and nominations from key organisations,
- confirming the initial stakeholder map and engagement sequence,
- developing the oversight board composition,
- developing the executive committee composition,
- agreeing governance terms of reference,
- establishing competition-law and neutrality protocols,
- setting a timetable towards the first approved plan,
- producing a funding principles paper and then a funding proposal,
- producing an outline delivery brief,
- and establishing initial success measures.
The PDG revealed that the initiative should start in 2027 with a clear route to proper governance, balanced market participation, funding principles, success measures and a full delivery plan, with the aim of moving quickly from encouragement to organisation, and from organisation to delivery.
Next steps
Looking ahead, the PDG will confirm the order in which responding stakeholders will be approached, setting up the practical management approach for responses and nominations, and working with the FCA so that communications following publication of the final report are properly timed.
It will also begin preparing the first working papers needed to support the mobilisation phase.
These will cover governance, competition law and neutrality, stakeholder engagement, funding principles, success measures and the outline delivery brief.
As responses come in, it will look for areas of agreement, issues that need early resolution, and people with the experience and authority to help build the Initiative properly, and will then set out the process for forming the executive group and oversight board.