Ten years ago, at a dinner being held by what was then still the Association of IFAs, Oliver Letwin MP was repeatedly interrupted by shouts from consumer rights champion Mick McAteer during a speech in which he made digs at the so-called ‘nanny state’.
The Conservative MP adopted an emotive tone, comparing IFAs to the ladies who run a riding school for the disabled, which he claimed is also beset by over-regulation.
Mr Letwin’s condemnation of the Treasury Select Committee’s intrusion into financial services that prompted Mr McAteer to heckle him with cries of “rubbish”, but the adviser audience that even before the RDR felt over-burdened with regulation unsurprisingly applauded.
As the regulation reporter for Financial Adviser at that time, all I ever saw is the growing body of rules across financial services would increase cost for consumers and not result in any extra safety, despite the City watchdog claiming greater consumer protection.
Since that time we have had the near-collapse of the financial system, mass mis-selling of payment protection insurance (among other scandals), and consumers who feel even less safe handing their cash to financial services providers today than ever.
That is why the statistics thrown up by Scottish Widows’ protection report, while depressing were hardly surprising.
The study, based on research carried out by YouGov among 5,221 adults, found that among even mortgage holders, only 50 per cent have any life cover, while just 17 per cent had a critical illness policy and 7 per cent an income protection policy.
What’s worse is that these mediocre figures were for the group accounting for by far the bulk of protection customers, representing 75 per cent of critical illness and 69 per cent of income protection policies in force.
The results echo a separate YouGov study carried out on behalf of Friends Life in the first quarter of this year, which revealed of 2,031 people surveyed only 4 per cent have income protection, 7 per cent have critical illness cover and 23 per cent have life insurance.
In a world where you can’t move for being told to “mind the gap” on this or that, the government should be truly ashamed of the nation’s protection void.
So, while I will be the first to roll my eyes when yet more red tape is produced, I would argue it isn’t health and safety gone mad to make sure someone whose financial fortunes fall had a safety net in place to catch them.
The government needs to listen to the words expressed by Canada Life in Financial Adviser and consider compulsion when it comes to protection.
The state safety net it provides has many holes in it and the solution of plugging them with cash is now widely discredited. That is why we are now semi-compelled to save for a pension and it makes sense to extend this to protection.
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