The recent announcement of the FCA Market Study in to the Protection Market MS24/1.1 is possibly the most important foray in to Protection distribution since GI Regulation was brought to Market in January 2005. Whilst it is only a review at this stage, it is hoped that some of the poor practices still exhibited in relation to the value to the end consumer will be identified and addressed. Certainly the scope of the paper outlined in the Terms of Reference publication is an encouraging start and, combined with Consumer Duty, could start to right the wrongs that still exist in relation to consumer value. The study will focus on four main areas : • Consumer needs, engagement and understanding: the benefits and the value of pure protection products to clients, the nature and complexity of products and whether they are presented in a way that is understandable to clients, how clients make choices, the benefits and the value of services provided by intermediaries, how well clients understand how intermediaries are remunerated, how engaged clients are with pure protection products they have and how cross-selling occurs. • Competitive constraints on insurers and intermediaries: the importance of intermediaries as a route to market and the value of services they provide to insurers, the relative bargaining power between intermediaries and insurers, the nature of competition between insurers for distribution channels, the broader macroeconomic environment and its impact on how insurers and intermediaries compete and the nature of competition between insurers and between intermediaries. • Commission incentives and potential conflicts of interest: the size and structure of commissions in the pure Mike Allison Director of Protection Paradigm Protect Protection Market Update 04 AUTUMN PROTECT NEWSLETTER Welcome to the latest edition of the Paradigm Protect Newsletter! Musings on 40 Years in the Industry and Protection Regulation - MS24/1.1 In September this year I celebrated my 40th year in Financial Services and I got time to reflect on the huge changes that have occurred in that time. I could write a book on the subject, but won’t in this introduction – I promise!! What I would say is that the most startling changes have come in the areas of regulation and professionalism and therefore the real value of advice across the whole spectrum of financial services products via quality advisers. What is something to bemoan in that time is the number of Providers operating in all spaces, potentially narrowing choice for consumers. The demise of Home Service in that time, brought about for a number of reasons was one of many factors that led to under insurance and the evolution of the much examined and talked about “Protection Gap”. Nevertheless, there is much to do to make the industry better and to finally focus attention on the consumer as the most important “cog” in the distribution wheel is something that has been missing for some time in my opinion.
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