The Financial Conduct Authority (FCA) has revealed activity for its pure protection market study will continue until at least the second half of 2026.
The regulator also indicated that the review will have a high impact on firms in the market and that the protection market was a “particularly important sector”.
When launching the market study last month, the FCA said it expected to give an interim report with initial findings and proposed next steps around the end of the year.
Today’s updates came in the FCA’s latest regulatory initiatives grid which identifies the projects the regulator is working on and their likely timescale.
‘High’ impact on firms
In the update about its pure protection market study, the FCA said: “Consumers rely on pure protection products to provide financial resilience, often when they are in vulnerable circumstances, so it is a particularly important sector.
“The FCA has launched a market study into the distribution of pure protection products to understand whether the market is functioning well and whether consumers are receiving good outcomes.
“In particular, the FCA want to look at the design of some commission arrangements, whether some pure protection products provide fair value to consumers, and the strength of competition given the recent exit of several providers.”
It expects a “high” indicative impact on firms and said there was formal engagement planned in April to June, and July to September this year with a key milestone set for the last three months of the year.
Further formal engagement is planned for the first six months of 2026 with a key milestone in place post-July 2026.
Expanded focus
The FCA expanded the areas under consideration for its pure protection market study to include restricted panels of insurers used by distributors’ cover for customers who have pre-existing medical conditions and barriers to innovation and investment.
It will also consider the activities of reinsurers, portals, product comparison platforms, and lead generators as part of its pure protection review.
These had not been within the scope of the study when the FCA published its initial terms of reference in August 2024, but have been added after consultation with the market.
However, private medical insurance (PMI), business and key person insurance, accident, sickness and unemployment insurance (ASU), funeral plans and insurance products with a savings or investment element will be outside the scope.
