Protection Guru: Consumer Duty can benefit both clients and advisers

New data from Protection Guru suggests that advisers who prioritise best value protection products rather than simply the cheapest options are not only improving consumer outcomes but also increasing their commission earnings.

The findings, based on Q4 2024 data from users of Protection Guru Pro (PGP), show that advisers who used the platform to assess both quality and price earned an average of £295.60 more per policy compared to those who focused solely on the lowest-cost option.

INCREASED ADVISER EARNINGS

Protection Guru Pro allows advisers to compare protection products across life insurance, critical illness, income protection, and business protection in a way that aligns with FCA Consumer Duty requirements. Instead of recommending the cheapest product, advisers can identify the best value plan based on clients’ specific needs.

According to the data, advisers saw commission increases across multiple product types:

Life protection – £98.66 increase
Income protection – £263.23 increase
Critical illness – £360.73 increase
Family income benefit (life only) – £64.18 increase
Key person life only – £162.80 increase
Key person with critical illness – £455.48 increase

PRIORITISING VALUE OVER PRICE

Ian McKenna, founder of Protection Guru, noted that while the system’s primary function is to help advisers identify best-value protection plans for consumers, the added commission is a natural byproduct of the extra work advisers must do to meet their regulatory obligations.

He said: “For too long, the industry was guided by the Financial Ombudsman Service to prioritise the cheapest plans over those that represented best value. Consumer Duty changed this, but it puts significant additional burdens on advisers and necessitates changes in working practices.

“This can be a major challenge, particularly when conversations start with price comparison and consumers end up fixated on the lowest price. By assessing quality first, advisers can contrast quality and price to identify best value.

“We are pleased to demonstrate how delivering on FCA Consumer Duty obligations can also increase adviser income. This should be a huge driver for implementing revised business processes.”

CONSUMER PREFERENCES AND LONG-TERM POLICY RETENTION

Protection Guru’s analysis also found that 85% of consumers prefer a better value plan over the cheapest one, particularly when the price difference is minimal.

Additionally, policies that are tailored around best value rather than just price are more likely to remain in force, as clients have a clearer understanding of the benefits they are receiving.

MEETING CONSUMER DUTY REQUIREMENTS

McKenna also warned that advisers must take a broad approach to assessing value across all protection products, not just critical illness cover.

“The FCA have made it clear that they expect advisers to assess value across all protection products. If you are using a system that only analyses quality for critical illness, are you putting a target on your back when you get a Consumer Duty visit from the FCA?

“Our service enables advisers to assess value for life protection, income protection, critical illness, family and income benefit, and key person plans at a competitive price. On average, an adviser will make up for the annual license cost by putting two plans a year through our system. After that, every client advised increases revenue.”