Key Consumer Duty developments and recent communications issued by both AMI and the FCA, with commentary on implications for mortgage intermediary firms…
In November 2021 AMI released its second protection Viewpoint. ‘Protection: Moving forward’. It obtained the views of 5,000 consumers and over 250 mortgage advisers, with the aim to build on the insight gathered from our 2020 research and to provide new views. For anyone that hasn’t read the research report and would like to, it’s available via the AMI website homepage.
One statistic that stood out again this year was the lack of consumer trust around an adviser’s motivations. 42% of consumers believe their adviser only suggested protection to increase their commission (52% shared this view in 2020). Now that we’ve repeated Viewpoint for a second year, the industry has a consistent and clear message from consumers. The challenge is, how do we build trust?
It’s important that we take a step back and consider how the average consumer views a firm’s protection process. With the large gap between the number of mortgage advisers that say they mention protection and those consumers that recall a conversation, another consistent feature of this year’s report, it’s clear that protection conversations are not memorable nor meaningful enough.
This year’s research showed that a third of mortgage advisers do not contact their customers post protection sale. This could be perpetuating the trust issue amongst those who have purchased protection products. If a customer hears from their mortgage adviser when their fixed mortgage rate is due to come to an end but never hears from them on the protection side, they may perceive that their adviser ‘sold’ protection for one reason only: money.
60% of consumers told us they want contact once protection cover has been arranged, with annually the most popular option. It seems consumers are content with the amount of ongoing contact from their mortgage broker more generally – 84% said the level of contact is about right. Perhaps consumers see mortgages as ‘once and done’ (until it’s time to review again) but view insurance as something where they want – and expect – more regular engagement and interaction.
Interestingly nearly a third of consumers said the most valuable protection related contact from their mortgage broker is not a post-contact call to review cover requirements but a personalised annual statement. This type of contact is most popular with 18-34 year olds (48%), with 34% of 35-55 year olds sharing this view but is less popular with the over 55’s (24%). It seems that communications with a purpose resonates with some consumers but a very small number (8%) of mortgage advisers currently engage with their customers in this way.
AMI is keen to support other initiatives that help move the protection agenda forward. During 2022 we will work with the PDG and FTRC to highlight to government and GP surgeries the wider benefits of speeding up the medical report process via electronic GP reports. Protection insurance can help both consumers and the NHS by helping to alleviate pressures on our health service, such as by providing funds to allow private treatment and through additional support services on some policies, such as physio or counselling, reducing the cost, pressure and backlog within the NHS. Whilst it’s great to see the use of electronic GP reports increase during the pandemic, we hope this work will raise the percentage of electronic GP reports even higher.
Stacy Reeve, Senior Policy Adviser
AMI, January 2022