Mortgage Market Review  

Concerns over protection sales flagged with FCA

FCA rules state that an adviser only needs to offer a protection review when they provide mortgage advice if protection is within their scope of services document, but Caroline Bradley, group risk and regulatory director at Tenet, said it was best practice to review protection needs as a holistic part of any advice service.

She said the company's concerns about the sale of protection products had led it to push for an increase in protection sales in recent years.

Neil McCarthy, sales and marketing director at LifeQuote, agreed this was a potential issue but said it was "more complex" than simply how buoyant or otherwise the property market was.

He said: "We would estimate that around half of protection sales are mortgage related, and when the mortgage market is particularly strong the primary requirement placed on mortgage brokers is sourcing the loan.

"With a finite number of advisers, and a more complex and lengthy mortgage sales process, this will inevitably mean that protection sales may suffer.

"However, this is not the whole issue, as protection sales should not be the sole remit of brokers, as many IFAs will have more regular contact with clients who also have protection needs, whether its general protection, for estate planning or business protection.

"Technology advancements and the ability to outsource case management have been a great enabler for many advisers, especially where even engaging in a protection discussion with a client poses issues, for example if your client has health or lifestyle issues, but nonetheless needs cover."

Jennifer Gilchrist, protection proposition lead at Royal London, attributed the issue to the length of time it takes to secure a mortgage offer following the Mortgage Market Review and said this could be addressed by streamlining both the mortgage and protection process.

She said: "This does have an impact on the amount of time a client can then spend completing the paperwork to secure mortgage protection cover.

"I don’t think the problem is poor practices among mortgage advisers it is simply time poor clients."

The FCA did not respond to a request for comment.

damian.fantato@ft.com