06 SPRING PROTECT NEWSLETTER • Strengthen controls around switching so that firms can evidence a clear, demonstrable benefit to the consumer; and provide reasons why any conversion options or guaranteed insurability options were not used or why policies were switched and not “topped up,” especially where clients had contracted new medical issues since the original policy inception. Where Critical Illness products were switched potentially use independent software to demonstrate the added consumer benefits - Paradigm Protect can help with this. • Review remuneration and clawback arrangements to ensure they do not distort adviser behaviour. The FCA remains focused on ensuring fair value assessments are robust, improving transparency in pricing and features and ensuring advisers can clearly articulate value, especially where product complexity is high. Firms can aim to: • Review their Fair Value Assessments (FVAs) to ensure they are current, data driven and reflect distribution arrangements; and • Ensure advisers can explain product differences, especially where lower claims ratios or complex features may reduce consumer value. Higher claims ratios can be used as a rationale for selecting specific Providers. The FCA observes that claims processes work well overall but sees room for improvement, especially around claims handling support from advisers and consumer understanding of exclusions and limitations. Firms can support this by strengthening their post-sale support processes and ensure clients understand the scope and limits of cover. Firms could use claim statistics from individual Providers in their decision making process, and I feel mortgage firms should look at how protection claims support fits into their ongoing service model. The FCA is increasingly alert to the role of price comparison platforms, lead generators, portals and integrated underwriting technologies, in particular where these may create complex frameworks that distort competitive conditions. If firms rely on third party technology or platforms, they should revisit their due diligence, focusing on whether those tools limit consumer choice or reinforce a narrow set of Provider options. What actions can firms prioritise now? Strengthen Consumer Duty evidence • Document why product recommendations represent fair value for each client. • Ensure protection needs are assessed and recorded consistently across mortgage and financial planning processes.
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