According to Mortgage Advice Bureau, approximately 90% of all mortgages are secured through an adviser, and 80% of protection are sold via the same channel. Consumers trust us to guide them through the biggest financial commitment of their lives.
Yet, when we look at how well those same consumers protect their homes, families, and incomes, a stark and uncomfortable truth emerges. According to the Financial Conduct Authority’s (FCA) Pure Protection Market Study Interim Report, only 42% of UK adults hold a pure protection policy. Flipping that statistic on its head, 58% of the population has no financial safety net against death, serious illness, or injury.
As advisers, it is our collective responsibility to fix, but more than that, it represents an unprecedented growth opportunity for firms to change how they approach protection.
The FCA’s interim report gives us a clear look at how the regulator views our sector and the good news is that the core fundamentals of pure financial protection are strong. The FCA notes that for people who actually buy the products, the market works well, as claims acceptance rates are remarkably high, averaging 98% across the board, and customer complaints remain low.
Crucially, the regulator confirmed it does not plan to introduce interventions like capping or banning commissions. They recognise that protection is a product that is “sold, not bought,” and that intermediaries play an essential part in the process by helping people protect their loved ones and navigate a complex market.
However, the FCA highlighted key areas that must be addressed:
- The Awareness Vacuum: Of the 58% of people who do not hold protection, a significant 59% have simply never even considered their needs, or even been made aware of the importance of protection. They aren’t actively rejecting insurance, they just haven’t been prompted to think about it.
- The “Churning” Risk: The report noted a modest spike in policy lapses right after commission clawback periods end (around 2% of the sample, or 19,000 customers a year). The FCA warns that some advisers may be moving clients to new policies just to trigger repeat commissions rather than serving client needs. The regulator wants the industry to better track and monitor this switching data before its final report.
- Product Disparities: Products like Income Protection carry lower claims ratios (around 40%) because they are more complex and costly to manage, and the FCA plans to refresh this data using full-year metrics.
The message from the regulator is clear, the current distribution model works, but we are leaving far too many people exposed due to not including it in their overall advice to clients as part of the mortgage advice process.
THE DUAL OPPORTUNITY: NEW CLIENTS AND THE BACK BOOK
Bridging this gap requires us to stop viewing protection as an afterthought to a mortgage application, it clearly needs to be a core pillar of our advice.
When you write a mortgage for a new client, you hold the ultimate opportunity to highlight the importance of protection. The FCA report explicitly confirms that major life events, like buying a home, are when consumers are most open to protecting their financial future. If a client walks out of your office with a mortgage but no income protection or life cover, the job is only half done.
But the opportunity doesn’t stop with new business, think about your “back book” and the existing clients you haven’t spoken to in twelve months, two years, or five years. Their lives have changed, they’ve had children, changed jobs, or even taken on more debt and so by proactively reaching out to your old database to review their protection needs, you aren’t just opening up a highly profitable revenue stream, you are delivering a true duty of care to your clients.
FIXING THE TRAINING FAILURE
I know why many advisers struggle here, as if you have always found it difficult to position protection, or if you feel like you’re pulling teeth trying to get clients to care, you are not alone.
The reality is that the training supplied by many networks and firms doesn’t resonate with some advisers, as it’s often compliance-heavy, product-focused, and completely detached from the psychology of how to have real, human conversations with a client.
In my experience, it’s vital to help advisers move away from transactional selling and master the art of making people aware of the importance of protection, and give them the actual frameworks, scripts, and soft skills needed to make insurance a natural, high-converting part of your business.
The gap highlighted by the FCA is our industry’s biggest blind spot, but for forward-thinking advisers, it is your greatest path to growth and so let’s start bridging it together to ensure your clients have the best possible step to protecting their own and their families future.
