"Of 70,000 mortgages sold each month by intermediaries, only one in four sold a GI policy with it."
Speaking at yesterday's FSE Manchester, Berry said of 70,000 mortgages sold each month by intermediaries, only one in four sold a GI policy with it. This, he said, meant 52,500 missed GI opportunities each month, which would mean £3.7m of potential monthly income being lost.
Berry also highlighted a potential regulatory issue for those advisers who were choosing not to advise on protection or GI, especially if a need had been highlighted in their factfind.
He said: “If there is a need identified by the factfind, and the adviser is not acting on this then there could be a regulatory issue. Advisers who are effectively not using their permissions, might be asked whether they really need those permissions. There is also a duty of care and customer outcome perspective to consider – please don’t ignore the wants and needs of the customer. Make sure you deliver the advice. If you’re not going to provide the advice, then make sure you refer.”
Berry said that a major benefit for advisers in offering GI advice and sales was the recurring income that could be generated. He said that at the start of every year, firms could effectively pay for their office costs, their PI insurance, and other fixed costs through their recurring income generated by ongoing GI sales.
Johnny Timpson of Scottish Widows added that tforthcoming changes and cuts to welfare benefits provide advisers with the perfect opportunity to review client’s protection wants and needs.
Highlighting the significant cuts that will be introduced to both Support for Mortgage Interest and Bereavement Benefit, Timpson suggested that many clients would be unaware of the lack of State support on offer to them and their families should they be unable to work for any reason or pass away.
In terms of SMI, from April 2018, individuals will have to wait 39 weeks before receiving the benefit plus it will be crystallised as a loan rather than a straight benefit, and the State is seeking to place a charge on the property in order to guarantee it will be paid back.
From April next year, Bereavement Benefit will only be available for 12 months and will only be £100 a week. The lump sum available will be raised from £2k to £5k however.
Timpson said: “Both these changes give you every reason to review your existing bank of mortgage and protection clients because, quite simply, the State support given is going change a lot. This means reviewing existing and new client’s mortgage protection needs and reviewing their family protection needs, especially those with young children and those who are divorced, separated and cohabiting.”
