According to new adviser research conducted by Guardian about the impact of Consumer Duty on the protection market, over 40% of advisers said they expect to make more protection recommendations as a result of the regulation.
A further 58% expect to make the same number of protection recommendations, with only a small minority (1%) who said they expect to make less.
This positive adviser sentiment about the impact of Consumer Duty was also reflected in the overwhelming majority view that the regulation would result in a move by advisers towards value-led protection recommendations:
- 84% agreed that with Consumer Duty’s emphasis on fair value, the portals and associated product analysis services will become a more important part of the selection process
- 83% expect Consumer Duty to improve consumer experience of protection
- 81% said that Consumer Duty will result in more advisers focusing on quality over price when selling protection
The research quizzed advisers about how Consumer Duty was impacting their own businesses, and what changes if any they were making to comply. Responding to the survey, 62% said that the Consumer Duty was having at least a degree of impact, with 49% stating it was having ‘some’ or ‘reasonable’ impact, with another 13% stating the impact was ‘big’ or ‘very big’.
When asked to rank which of the outcomes or cross cutting rules was having the biggest impact in terms of the changes being made to their firm, the 442 advisers who answered this question ranked ‘Consumer understanding’ as number one. This was followed by ‘Price and value’ in second place, and ‘Products and services’ in third. ‘Consumer support’ came next, followed by ‘Firms should act in good faith’, then ‘Firms should avoid foreseeable harm’, and bottom of the list in terms of the changes being made, was ‘Firms should help consumers achieve their financial objectives’, most likely reflecting that this is already well incorporated into their business and processes.
The survey also asked advisers to rank the area/function within their business that Consumer Duty was causing the bulk of the changes being made. Of the 429 responding here, advisers ranked ‘Advice processes’ at number one, followed by ‘Client communications’. ‘Documenting evidence’ came third, followed by ‘Partnerships’, including making protection referrals. Lower down the list, advisers ranked ‘Due diligence of their recommendation’, ‘Fees charged’ and ‘IT processes’ respectively in terms of the areas/functions where changes were being made because of Consumer Duty.
35% of advisers said they’d made significant changes to their website. Advisers were also asked whether across the market, providers communication to date was clear and useful enough to equip them to comply with the Duty, with 89% of them answering yes.
Jacqui Gillies, Guardian’s marketing and proposition director, 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 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.
“Having carried out our own analysis within Guardian, we appreciate the time and effort needed to be ready for the new regulation coming in at the end of July so it’s good that the vast majority of advisers believe the information from providers is clear and useful – and will allow them to comply with the Duty. Advisers can find more information on Guardian’s target markets and fair value assessments on our website.”
Ian McKenna, Protection Guru founder, added: “While the increased profile Consumer Duty will give protection advice is an enormous opportunity, advisers need to understand the significantly increased responsibility they will have in justifying advice. For decades it has been possible to create price comparison tables in just a couple of minutes, but now they have the challenge to assess and justify value. This requires far more detailed analysis of policy terms and conditions.
“Protection Guru Pro has been designed to produce analysis to the new far higher standard, just as quickly as was previously possible for price only comparisons. It will also produce a detailed audit trail of the reasons for any recommendation. This audit trail is essential as advisers must fully understand the process behind any recommendation, it cannot just be a black box that delivers an answer.”
