In the summer, the government published its Mortgage Charter – to formalise and standardise the options available to those who felt they were struggling with their existing mortgage payments, and to ease worries about what sort of mortgage they could afford should their deal be coming to an end.
Intervention along these lines tends to be welcomed, however there appears to be less focus on attempts to improve the level of protection those very same individuals have.
To my mind, we still have a decoupling between the mortgage and the homeowner’s protection cover and that could leave both adviser and client compromised.
On the plus side, adviser-client interactions do appear to be increasing, and while we can’t put that specifically down to the Consumer Duty, I suspect it will have played a considerable role in reiterating the imperative of adviser-led conversations.
The latest AMI Protection Viewpoint research recently revealed the percentage of consumers who can recall their adviser raising the protection conversation has increased – now up to 50% versus 36% back in 2020.
However, what’s also clear from the research is that an opportunity continues to be missed by the adviser profession, and you can’t help wondering what the consequences of this might be, for both sides, particularly if a consumer makes a complaint about a need to rely upon a protection product which an adviser failed to mention, when they arranged their mortgage.
More than one in four (28%) of consumers, again according to the Ami research, did not recall any protection conversation with their mortgage adviser, and this clearly tells a tale in terms of these clients not being protected, but there is also another killer point here, which is that these consumers said they would have been interested in having such a conversation.
If that isn’t an open-door advisers are failing to walk through, then I’m not sure what is, and it doesn’t bear thinking about the lack of financial protection these clients have but also the potential loss of a deeper client relationship and ongoing income for advisory firms, all of which contributes to being able to deliver a quality advice service.
There are some other statistics within the Ami research which should necessitate, at the very least, some serious consideration by broker firms and I would strongly suggest requires immediate action.
For instance, one in three advisers say their firm does not have any specific online presence when it comes to protection, while over one-third of consumers view price comparison websites as independent or impartial, and over one in five struggle to identify any benefits of using an adviser for protection.
Again, there is clearly an opportunity here for mortgage and protection brokers to present their case to their clients when it comes to protection advice, and why they – or the specialist they refer to – are best placed to come up with a series of recommendations that genuinely meet consumer needs.
Left to their own devices, via comparison sites and the like, how many consumers are simply going to plump for the cheapest premium they see without any thought of the protection product they are purchasing and whether it adequately meets their needs? How many never even get that far and merely regard life insurance or other protection products as not worth the cost?
Plus, of course, the very fact they’ve sought out an adviser for mortgage advice surely propels them above a generic website or price comparison site, in terms of their openness to discussing this highly important issue.
Let’s finish on a positive, and it is the finding that 40% of advisers said they had seen an increase in protection conversations since the introduction of the Consumer Duty. And let’s not forget, these are very early days when it comes to embedding the Duty, and there should be further progress on this in the months ahead.
Certainly, now is the time to digest the AMI Protection Viewpoint, its positive results and what it tells us about consumers’ willingness to engage in a protection conversation. Think carefully about how advisers can position themselves as the right people to be instigating and facilitating them, which should ultimately lead to greater protection for UK consumers, and the side effect of more business for advice firms.
Rob Clifford is Chief Executive of Stonebridge
