The FCA protection market study shouldn’t ignore redundancy

Considering a third of employers are likely to implement staff redundancies by January 2027, according to Acas, redundancy cover shouldn’t be ignored in wider protection discussions.

The FCA’s recently published Pure Protection Market Study rightly highlights that protection should be included in adviser conversations with everyone, not just those with a mortgage or children. And the ongoing threat of redundancy across many industries, not just now, but over the last decade or so, helps highlight the financially precarious nature of life and work, whether homeowner, renter, parent or not.

So, while income protection represents the ideal, a discussion alongside that about how to protect income in the face of unemployment arguably makes sense; for everyone.

LOWDOWN ON THE REDUNDANCY LANDSCAPE

One in three (33%) employers are likely to implement staff redundancies by early next year, according to new research by the workplace advisory, conciliation and arbitration service Acas.

Acas’ data shows that risk varies greatly by company size. While nearly half (46%) of large businesses plan to downsize, only 21% of small and medium-sized enterprises (SMEs) expect to make cuts.

The driving factors are financial and regulatory, including high operating costs, wage inflation, rising National Insurance contributions, soaring energy prices and slow overall economic growth. The industries facing the greatest risk include retail, hospitality, manufacturing and the public sector.

Of course, the threat of redundancy is nothing new, but long-term trends paint a potentially worrying picture. In February 2026, employers submitted 430 HR1 advance notification forms covering potential redundancies. That figure is almost identical to the 433 forms recorded in February 2009, when the impact of the financial crisis was becoming increasingly visible in the labour market.

That doesn’t necessarily mean the same pattern will follow, but it does help highlight the scale of the problem right now.

It’s worth noting that HR1 notifications are an early-warning measure of potential redundancies, rather than a count of jobs ultimately lost. And today’s economic circumstances are very different from those of 2009. But the proximity of the two figures is nevertheless striking and provides a timely reason to reconsider who protection advice is reaching.

On that note, the FCA’s Pure Protection Market Study is helping shine a light on accessibility. It revealed that 58% of people do not hold any protection products, while 59% of those people have never considered their protection needs.

The regulator says it wants to work with industry and other stakeholders to close that gap. We warmly welcome these plans, which include the Protection Distributors’ Group leading a consumer awareness campaign, targeted at groups who are less likely to take out protection products. Plus, the Association of Mortgage Intermediaries leading work to help advisers improve how they discuss protection with their customers.

TIME FOR ADVISERS TO BROADEN THE CONTEXT

Just like the threat of redundancy, the protection gap is not a new issue. What has changed is the context in which advisers are being asked to address it.

Redundancy data provides a powerful reminder that employment income cannot necessarily be taken for granted. At the same time, the FCA is explicitly asking the industry to reach people who have historically been outside the protection conversation. Those two developments belong together.

The question for advisers is therefore not simply whether a client has life cover or critical illness cover. It is whether the client’s financial resilience has been considered in the context of how they actually live and earn today.

That may mean a different conversation with a renter than with a homeowner. It may mean considering different options for a lower-income household, a self-employed worker or someone whose employment circumstances are less predictable.

The FCA has now put the protection gap firmly back on the industry’s agenda. The redundancy data provides a timely reminder of why that agenda matters now.

For advisers, the opportunity is to make protection a broader conversation about financial resilience; one that doesn’t always start with whether someone has a mortgage, but with a much more fundamental question: what happens to this household if the income stops?