Necessity, so we are told, is the mother of innovation. And in recent years the financial services industry has made a good fist of ‘inventing’ in the ‘necessary’ interests of empowering consumers.
We have seen it with the development of fund platforms that now give consumers control over their investments – and in the case of financial advisers, a watching eye on their clients’ investments.
Despite the thorny issue of best-buy lists and Woodford promotions, and lingering concerns over what constitutes fair charges (ongoing as well as exit), fund platforms have been an overwhelming force for good.
We have also witnessed it with comparison websites that now enable people to buy a whole array of insurance products with a minimum of fuss – and with internet/mobile banking.
Goodbye high-street banking, hello FirstDirect, Monzo and Starling – and in the caseof comparison websites, hello Meerkats (I stillfind them amusing).
But nowhere has the mother of innovation been more relevant in recent years than in financial protection insurance – a part of the financial services market still tainted a little by the scars of payment protection insurance, medical non-disclosure issues and a poor press.
Slowly, but surely, we are seeing a financial protection industry develop that is fit for purpose - moving forwards rather than backwards and putting consumers first (front of house).
While I am still surprised when buyers of financial protection insurance have claims turned down for what seems like ‘serious’ illnesses – for example, cardiac arrest – the industry is in better shape than it has ever been.
Consumers are being better served while financial advisers now have tools available that enable them to make considered product choices; a far cry from yesteryear.
One example of necessary innovation is that pioneered by new kid on the block Guardian.
Last May I used this column to talk about its decision to introduce a new form of critical illness cover, one that would move with the times.
Rather than selling a critical illness policy with conditions set in stone, Guardian said that when it upgraded its policy the upgrades would be available not just to new policyholders but to existing ones.
Some enhancements, it said, might involve an additional cost if existing policy holders wanted them.
I applauded the move, stating: ‘It is called treating customers fairly and it should be part of an insurer’s DNA.”
These were words written at the time with much passion, given a case I had reported on in The Mail on Sunday where a motor accident victim had not had his claim met because his two ‘protection’ policies only paid out if the accident had resulted in the loss of both legs, not just the one he had lost.
It was a case that angered me greatly.
Well, Guardian has been true to its word. It has just announced its first set of upgrades (available to existing policyholders) – as well as some downgrades (which are not retrospective and only apply to new customers).