Term assurance, critical illness cover, income protection insurance, and whole of life insurance will all be scrutinised by the industry watchdog following concerns as to whether they deliver good outcomes or offer good value to policyholders.
A recent announcement from the Financial Conduct Authority (FCA), the financial industry watchdog, highlights its concerns about the real value of Pure Protection products to policyholders.
Pure protection products are those policies designed to help people when their circumstances change (such as loss of employment, serious illness or death). These insurance products include:
- Term assurance, a type of life insurance policy that pays a lump sum to financial dependants if the policyholder dies within a specified timeframe
- Critical illness cover, that pays out a lump sum that might be needed for medical expenses, mortgage payments or adaptations to the home
- Income protection insurance, a policy that provides regular income to help maintain financial stability following a period of injury or illness, and
- Whole of life insurance, including ‘over 50s plans’, that pay a lump sum to family or the estate when a person dies
As part of the FCA’s wider Consumer Duty roll out, these products will be reviewed with a focus on the outcomes they deliver to policyholders, together with their value for money.
Commenting on the review, Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said:
“Pure protection can offer peace of mind and financial security, often when people are at their most vulnerable. Consumers should be able to buy products which meet their needs and provide fair value.
“We have seen indications that this may not be the case across the pure protection market and we will act if we find that the market is not working well.”
The FCA has seen examples of mis-sold insurance, with policyholders being encouraged to switch to another policy unnecessarily just so that the adviser earns a repeat commission.
TLW Solicitors’ view
+ −Sarah Spruce, Partner and Head of the Professional Negligence team at TLW Solicitors, says of the FCA’s decision:
“Commission-based fees were abolished for financial advice relating to pensions and investments back in 2012 with the Retail Distribution Review (RDR). At the time, there was no evidence to suggest that commission on the sale of pure protection products resulted in poor customer outcomes. However, the FCA’s recent shift in emphasis to raising standards within financial services and ensuring consumers get the best outcomes means the wider industry is now rightfully under the regulator’s microscope.
“Having dealt with consumer protection claims, including a wide range of financial products and services, for many years at TLW Solicitors, I think this is a very welcome and sensible move by the FCA and aligns with their focus on Consumer Duty.
“Consumers should feel confident that the policies they buy are the best option for their particular needs and circumstances, rather than a way for unscrupulous advisers and intermediaries to earn more commission. It is early days to tell just how widespread the problem of insurance mis-selling is, but the door is certainly opening for claims against firms who allowed this to happen.”
Financial mis-selling claims specialists
+ −While pure protection insurance product mis-selling has been publicised only recently, TLW Solicitors has years of experience navigating the legal complexities of financial mis-selling across a wide range of financial products and services. We work on a ‘no-win, no-fee’ basis and offer a free, no-obligation assessment to help determine whether you have a claim.
You could be eligible for a refund of the money you paid out – compensation to put you back in the financial position you would have been in had you been given correct advice, plus interest at 8%.
Making a compensation claim can be tricky and feel overwhelming. Some people simply don’t know where to start or don’t have the time to investigate and gather the necessary paperwork to pursue what can sometimes be a complex process. Even if they receive an offer of compensation, then they may not know whether this is the correct amount that they are rightfully owed.
It can also be challenging to know who to approach if you think that you or a loved one have lost out financially as a result of insurance mis-selling. TLW Solicitors’ financial mis-selling team can investigate this further, including whether a complaint should be made in the first instance, and if not resolved, whether the dispute should be escalated to the Financial Ombudsman Service (FOS). FOS is an independent government backed body set up over twenty years ago to settle disputes between financial businesses regulated by the FCA and their customers.
Get in touch
+ −If you or a loved one have paid into a pure protection insurance policy that was unsuitable for your needs, or were encouraged to switch to another policy unnecessarily, then you may be eligible to claim compensation. Our team will have an initial discussion about your possible case. If your mis-sold insurance refund claim is suitable to take forward, then we will consider entering a ‘no-win no-fee’ agreement. This means that if your case is unsuccessful, then we will not charge for the time we have spent on your refund claim.
Please call us on 0800 169 5925, email us info@tlwsolicitors.co.uk, or use our call-back form below, and our team will contact you for an initial, no-obligation consultation.
It is important to get advice as soon as possible, as strict time limits can apply.
Minimum case values apply
Meet our Team
Meet Sarah, who heads up our experienced Financial Mis-Selling Claims team.
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