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Consumer Duty rules and economic environment cements need for protection advice

The same Tracker also revealed intermediary case volumes are also holding up and the vast majority of respondents have a high level of confidence in the industry in which they work and their own place within it.

It would however be remiss of me not to mention some of the challenges that advisory firms and their clients are likely to be facing presently, not least of which will be inflation and the cost of living, but also of course product rates and availability, lender appetite and service levels, and how all of this is shaping demand.

There are also other agenda items to be addressed, not least of which is the FCA’s newly-published Consumer Duty rules and how firms satisfy the regulator they are securing the right outcomes for both their new and existing clients, and indeed how lenders and providers will approach the requirements the Consumer Duty wants from them.

These challenges of course mesh together, and they are particularly relevant in terms of broader advice to clients, specifically around the question of protection and just what advisers should be doing in order to ensure potentially unforeseen circumstance changes do not have a devastating financial impact because there is no protection in place

We’ve talked a lot about advisers right across the industry taking the protection wants and needs of their clients seriously, and the Consumer Duty rules to my mind seem to reinforce even further what an important area this is to cover with consumers.

You might even argue, with some justification, that those firms who don’t – at the very least – walk their clients through the benefits of protection, its importance, what it covers, and when it might be vital, could be walking a very thin line in terms of whether they are delivering everything required of them by the Consumer Duty.

Indeed, as the industry seems to agree, potentially leaving a ‘protection gap’ when it comes to client advice, only to see that need required at a later date, could leave the advisory firm open to a significant challenge from both a customer point of view and that of the regulator.

This need to ensure protection coverage – especially when we have seen significant rises in the cost of living, with fewer people having savings to fall back on, and with the Bank of England warning of a recession which could last until the end of 2023 – has perhaps never been greater.

The “I’ve been too busy giving mortgage advice to focus on protection” excuse is really not going to wash – especially when firms have plenty of options to refer and introduce to specialist protection advisers.

Last month Stonebridge launched new functionality within our Revolution system to help advisers ensure clients choose the right level of protection, whether the adviser is able to write that business themselves or they refer the client on to a specialist. Advisers should have the protection conversation with every single client, every time, and not leave them potentially exposed to life-changing events that policies would cover.

It can be as simple as clicking a button to refer on, and by doing so, you know that you are doing everything you can to put that client in a position of strength when it comes to cover, plus we also wanted to ensure the system also deals with a confirmation should clients decline cover.

Of course, it is true advisers can’t force clients to protect themselves, but they can do everything in their power to outline exactly what these policies can deliver, in what circumstances, and what the consequences might be if the unexpected does happen. We will all I’m sure be able to draw upon examples of that.

Under the Consumer Duty, advisers will need to avoid causing ‘foreseeable harm’ to clients. A lack of protection advice and cover, which is subsequently required, may well be deemed to have contravened that new rule and therefore advisers could be on thin ice by not doing all they can in this area.

We’ve made it as simple as possible to avoid this scenario and if all advisers follow the same path, then they will not only be protecting their clients but also themselves.

Rob Clifford is chief executive of Stonebridge

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