The recent mini Budget U-turns and Autumn ‘Budget’ delivered by Chancellor, Jeremy Hunt, were both designed to calm the markets after a tumultuous period and, while the jury is still out, from a mortgage market perspective they appear to have done the trick with product pricing continuing to look more attractive and well below recent highs.
However, during the latter statement, Hunt confirmed the country is now in recession – something that markets anticipated but nonetheless a firm public confirmation of negative news.
To say this is a serious state of affairs is an understatement because recessions can often be accompanied by rising unemployment. And the fear of job losses may well be increasing for many people, particularly those who are homeowners refinancing and concerned about what that might mean for them in the future.
Add in the rising cost of living, and the likelihood they will have seen their mortgage costs significantly rise, and it won’t take a genius to conclude that protecting borrowers’ incomes for future changes in their circumstances might have risen to be more critical for them in recent months.
Protecting financial commitments
Judging by the increased activity we are seeing in protection policy demand, it would seem a growing number of advisers are rightly focusing more on their conversations about protection in the current economic situation, and what it could mean for consumer outcomes. This certainly presents the opportunity to outline the case for protection more clearly.
That said, as a profession there can still be a reluctance on the part of some mortgage advisers to invest enough time in fully outlining the options and risks when it comes to their client’s protection needs.
There is something of an irony here, in that at a time when many consumers are thinking about the ways they can save money, there could be a reluctance on their part to talk about policies which are going to impact on monthly outgoings. And yet, investing in protection premiums could be a lifesaver in the future, should they be unable to work having lost a job or become sick or suffer an accident which consequently reduces or curtails their income.
Naturally, it might not always feel like a ‘good time’ to have that protection conversation but, at the very least, someone should be having it with every single client.
Awareness of client care
At the moment, it would appear more advisers are doing so. They appear to be increasingly finding the time and focus to do this, and that may be partly a reflection of the purchase mortgage market being quieter of late.
It may also be due to the fact the regulatory requirements resulting from the Consumer Duty make it clear advisers need to be considering consumer outcomes not just at the point of advice, but with an equally close eye on the possibility of future detriment.
If, as an adviser, you have not fully assessed the protection needs of your client, or you have not put in place measures for the client to have discussions with another protection adviser, then this could come back to haunt you in the future if your client suffers as a result of any such advice gap.
Keeping informed and seeking help
Either in your own way or with the help of your network, you will be making sure that you are compliant with the requirements of Consumer Duty.
It means providing advisers with the tools and technology to fully explore initial needs and ultimate consumer outcomes. In terms of protection advice, as one example of a product which could mitigate foreseeable harm, if a mortgage adviser does not have the time, or does not feel personally equipped to do this, then providing them with a tech-driven referral process can help.
For those who opt for a referral, it is absolutely not a shortfall in their own proposition or the advice they provide. I think our industry is acutely aware mortgage broking is labour-intensive, the provision of mortgage advice can take hours and, when there are experts in a field such as protection, why not make the most of them?
The important point here is that all mortgage clients get protection advice – full stop.
If it’s not from the mortgage adviser, then it needs to be from someone else and in a controller manner: how else can an adviser firm establish the consumer definitely received advice?
The difference it can make to a client’s future, should they need to call upon it, can be startling – it can literally change lives. Let’s not underestimate the consequences of a lack of protection against a significant loss of income: for most consumers this is huge.