Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Strategy. Read the original article for full details.
FCA partners with AMI and industry groups to close UK protection gap
The Financial Conduct Authority has launched a new initiative with the Association of Mortgage Intermediaries and other stakeholders to tackle the UK's protection gap. The regulator will work alongside the government and key industry groups to encourage more people to take out critical illness cover, life insurance and income protection.
According to the report, around 58% of adults hold none of these protection policies, leaving millions financially vulnerable in the event of a death in the family, serious illness or loss of income.
What the initiative involves
The Association of Mortgage Intermediaries will lead work to help advisers improve how they discuss protection with their customers. The Money and Pensions Service and the Digital Property Market Steering Group will examine how to prompt people to consider protection at key life stages, including when they become a parent and when they buy or rent a home.
The Protection Distributors' Group will lead a consumer awareness campaign aimed at groups less likely to take out protection products. The wider work will focus on under-protected groups, including renters, the self-employed and gig economy workers, those on lower incomes and people with pre-existing medical conditions.
The initiative follows the FCA's Pure Protection Market Study. FCA director of competition Graeme Reynolds said competition in protection insurance works well for existing customers, but that the regulator is working with partners to increase coverage so more people are protected when they or their families need it most.
Innovation and next steps
The FCA says it wants to see greater innovation in the protection market. It will hold a webinar for firms to address what it describes as misunderstandings about its rules and expectations that may be seen as barriers.
The regulator will also work with the Association of British Insurers to reduce delays in obtaining medical records, and is inviting firms to take part in a TechSprint, with expressions of interest required by November 13.
Why it matters for letting agents and inventory clerks
Renters are explicitly named among the groups the initiative targets, and the Money and Pensions Service and Digital Property Market Steering Group are looking at prompting protection conversations when people buy or rent a home. Agents operating in the lettings sector may therefore see increased focus on protection discussions at the point of moving into a rented home.
Source: Mortgage Strategy