"I think, a massive boost for our industry in the current climate, and we’re interested to know what changes they're making to their business to comply with the Duty."
- Jacqui Gillies, marketing and proposition director at Guardian
Of those surveyed (800), over 40% said they think the Consumer Duty will prompt more protection recommendations, 58% expect to make the same amount and only 1% said they’re expecting a decrease in protection business. This positive sentiment towards the impact of the Consumer Duty was reflected by the 84% of advisers who agreed that considering the Duty’s emphasis on fair value, the importance of portals, and associated product analysis services during the selection process will inevitably grow.
Meanwhile, 81% of advisers agreed that the Consumer Duty will result in more advisers focusing on quality over price when selling protection, despite nearly 15% of adults in the UK having considered cancelling their life policy to save money, less than 8 months ago.
In December 2022, Vitality found that “many people did not see insurance as necessary,” with only 30% of those surveyed saying it was a non-negotiable financial priority. “Our research has shown protection policies are far from immune from the impact of the Cost-of-Living Crisis,” explained Andy Philo, strategic partnerships director at Vitality.
“With households up and down the country prioritising their current outgoings, it’s important they are reminded why they took their protection policy out in the first place and the safety net it provides them.
“As the economy faces more uncertainty, and savings are under pressure and people are thinking about where and how they can save money, it’s never been more important that people know the full value of a protection policy,” Philo concluded.
READ MORE: Now more than ever protection providers must demonstrate value of protection
When asked about the impact of the Consumer Duty, 62% of advisers said that the Duty is having at least a ‘degree’ of impact, 49% said ‘some’ impact and 13% said the impact was ‘big’ or ‘very big’. Of the outcomes or cross-cutting rules having the biggest impact in terms of changes being made to their firm, ‘consumer understanding’ was ranked the highest by the 442 advisers that responded. This was followed by ‘price and value’, ‘product and services’, ‘consumer support’, and ‘firms should act in good faith.’
Advisers felt that ‘firms should help consumers achieve their financial objectives’ was having the least impact; Guardian felt this meant that “it’s already well incorporated into their business and processes.”
Furthermore, when asked to rank the area/function within their business that Consumer Duty was causing the bulk of the changes to, of those who responded (429), advisers ranked ‘advice processes’ at number one, followed by ‘client communications’, ‘documenting evidence’, ‘partnerships’, and ‘due diligence of their recommendation’. Both ‘fees charged’ and ‘IT processes’ were considered the least affected.
Commenting on these findings, Jacqui Gillies, marketing and proposition director at Guardian, has said:
“It’s great to have so many advisers give us their view on Consumer Duty and even better to hear that the regulation is having a positive impact – not just on the customer but on the protection industry as a whole. The fact that over 40% of advisers said they expect it to lead to them making more recommendations will mean more customers getting the protection they need.
“It’s also encouraging to know that advisers are taking the Duty seriously and making changes to their businesses where they feel they have the potential to further improve outcomes for consumers. Knowing that 83% of advisers expect the Duty to improve the consumer experience of protection is, I think, a massive boost for our industry in the current climate, and we’re interested to know what changes they're making to their business to comply with the Duty.”
Roy Mcloughlin, Cavendish Ware Director of Strategic Partners, added:
“Whenever new regulation comes along, the workload and costs associated with the changes are often well documented. So it’s really good to see Guardian’s research findings show that when it comes to Consumer Duty, the majority of advice firms agree that it will lead to an improved consumer experience of protection, and also for many, an expectation that they will make more protection recommendations.”
