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AMI Warns: FCA Mortgage Review Risks Undermining Consumer Protection

AMI has concerns that the proposed changes outlined in the Mortgage Review could weaken consumer protection and undermine the principles of Consumer Duty...

Working in Mortgages – a new Charter and a call for volunteers

After three years of great success, Working in Mortgages (WIM), has pressed the reset button but this isn’t about a refresh - it’s a redefinition...

Your April ’25 update from AMI Chief Executive Stephanie Charman

This month, AMI Chief Executive Stephanie Charman discusses the Mortgage Rule Review, Protection Market Study, FCA Fees & Levies and ongoing AMI work...

FCA fees and levies 2025/26 – what’s the impact on our sector?

Whilst some press headlines have focused on the FCA cutting fees, it is important to consider the key components to understand the bigger picture...

Your March ’25 update from AMI Chief Executive Stephanie Charman

AMI Chief Executive Stephanie Charman summarises a hectic March, with FCA updates and ongoing AMI work...

Making Protection Personal

AMI Senior Policy Adviser Stacy Penn discusses AMI’s fifth Protection Viewpoint Report: Making Protection Personal, in the latest article for Moneyfacts…

In November 2024, the Association of Mortgage Intermediaries (AMI) launched its fifth Protection Viewpoint report – Making Protection Personal – in partnership with Royal London and Legal & General. The report emphasises the need for a stronger customer focus, addressing individual needs and aspirations.

Viewpoint has emerged as an eminent figure in the protection market, highlighting through comprehensive consumer market research (3,000 UK adults) key areas for industry to focus on. For the first time AMI explored consumer expectations on application and claims handling timeframes. We found that one in four (28%) consumers believe it should take no more than 48 hours from applying for protection to having it in place for someone with no complex health conditions, and a further 25% expect it to take less than a week. Regarding claims, 44% of consumers expect a decision within a week, and 27% anticipate receiving payment in their bank account within that timeframe.

Committing to improvement

While it can be easy for industry professionals to dismiss consumer views as unrealistic given information asymmetry on the mechanics of the protection buying process, a Consumer Duty era demands firms challenge the status quo. In AMI’s view, the Viewpoint findings on consumer expectations should be used as a benchmark for firms to assess, without negatively impacting consumer outcomes, ‘how far off are we?’ and, crucially, ‘can we get any closer?’.

It is disappointing that in 2024 only seven insurers, out of a potential 22, have pledged to meet the Protection Distributors Group (PDG) Claims Charter. The Charter represents what the PDG feels should be standard best practice. With good consumer outcomes in mind, the pledges do not seem unreasonable. Hopefully insurers are investigating and addressing any shortcomings in their ability to commit; technology is often cited as a barrier which while acknowledged given the scale of legacy IT systems in the sector, cannot be the ongoing rhetoric if we are to close the protection gap. Technological developments that help with the heavy lifting, working in tandem with the human touch of an adviser, are also welcomed. However, it is important that any innovation is not at the expense of getting the basics, such as making a claim, in the right place.

Generational trends

A recurring theme over the last three years of research is the increased protection appetite from the younger generations. Reassuringly this goes further than simply recognising its importance – 13% of Gen Z and 15% of Millennials have purchased Income Protection (IP) compared to just 5% of Gen X and 34% of Millennials have purchased life insurance compared to 27% of Boomers. These customer segments are likely to have vastly different financial timelines and goals, as is the way they wish to interact with financial services. We see this through the numbers of Gen Z and Millennials that review their cover (30% and 36% respectively) compared to just 17% of Gen X and 13% of Boomers.

Much of the investment will come through the Metro Mayors. The successes of the Burnham joint ventures with the private sector in Manchester will undoubtedly be a blueprint to be followed in other areas. Whilst this will kick-start volume, it will require a vast move away from the current market, driven by the volume speculative house builders who currently dominate the residential construction sector. However, to meet the targets, bringing back these older concepts must be incremental, not as a substitution for standard residential construction.

The implications for materials supply chains are considerable, as are questions over whether we have the required skills and talents in the working population. A huge expansion in apprenticeships linked to the construction sector has to occur, potentially at the expense of some of the more marginal universities and courses.

Having the conversation

With mortgage affordability set to ease in 2025, we are likely to see a shift from PTs to a greater share of remortgages. A mortgage coming to the end of its fixed rate presents an ideal opportunity for a protection conversation. AMI continues to champion the message to mortgage advisers that having a clear protection proposition, whether advising on in-house, signposting or referring, along with mapped out processes is fundamental. 

While easier said than done when operating within a busy mortgage environment (interestingly we saw a slight drop in the percentage of consumers that said their mortgage adviser initiated a protection conversation, 44% versus 50% in 2023 which could be reflective of the pressures advisers were under) having a set process means the conversation is less likely to slip through the net.

We found the most common time for mortgage advisers to raise protection is the fact find (38%) rather than the introduction (36%). Timing is key and bringing the concept of protection to the initial conversation so the customer recognises why the mortgage and insurances go hand in hand, could be the difference between a customer getting protected or walking away without cover. 15% of consumers (rising to 26% of 18- 34 year olds) would have been encouraged to take protection via an adviser if they were told about it earlier in the journey. While seemingly small percentages, even a small tweak to a mortgage adviser’s process could yield positive results over time.

The more that protection conversations occur during key mortgage customer touchpoints, the greater likelihood the conversation is normalised and is less likely to be seen by the customer as a sales or commission tactic. However, it seems it is a nuanced approach. We found 40% of Gen Z and 31% of Millennials said that if advisers demonstrated the value of protection better it would prompt them to consider purchasing protection from a mortgage adviser. This isn’t as straightforward as a product-based approach (which historically may have fed into the consumer narrative that advisers are only suggesting protection to increase their earnings) but nevertheless is a key discussion point for the industry and wider stakeholders. AMI plans to explore the wider topic of the value of advice within a separate Viewpoint this year.

Keeping the conversation going

Consumer Duty is leading to an increase in protection conversations with clients (41% of advisers) and a growing trend for advisers to recommend a wider range of protection products (31%). In recent weeks we have seen headlines suggesting the FCA might ease the Consumer Duty burden on firms. Government is keen to ensure that regulation is not an inhibitor to growth, however in AMI’s view it is more about streamlining the regulatory Handbook rather than scaling back. 

The FCA’s recent move to remove the Consumer Duty board champion role for firms appears to be a reactive attempt to reassure Government it understands its role in facilitating growth, given only in November it called out the influence of the Champion and their involvement in reviewing changes within the firm over the next year as positive. Anything that streamlines the price and value requirements on adviser firms given this is a bureaucratic nightmare is welcomed by AMI.

The Protection Viewpoint report underscores the growing role advisers play in keeping protection policies active, with more clients benefitting from regular reviews and tailored advice. A growing number of advisers are actively working to keep protection policies in force. Currently, 65% of advisers are proactively doing something, up from 60% in 2023, with over half (56%) conducting regular policy reviews, and 16% reminding clients of product flexibility and payment deferral options. For those doubting whether efforts are futile, 44% cited they have seen improvement in customer retention. As cost-of-living pressures continue, the industry is recognising that fears over engaging with customers may make them more likely to cancel are unfounded.  

Turning to insurer communications, our research showed that while 33% of consumers recalled receiving an annual statement from their insurer, only 16% said it prompted them to review their coverage. It is important that annual statements are fit for purpose and their aims are re-assessed. As for what consumers would like them to include, top requests are a reminder as to what the policy covers (57%), what it does not include (40%), the premium (48%), when the policy ends (46%), how to claim (41%) and the key benefits (40%). Interestingly, details about how many claims the insurer has paid out sat at the bottom of the list (14% stated they wanted it on their annual statement). Expanding on the research, other key considerations may include the use of clear, plain English and the format and layout of annual statements as these can be areas that are overlooked. When it comes to consumer communications, it is about quality over quantity.

In conclusion

It would be remiss of me not to mention the FCA’s protection market study. By the end of March, it is expected the FCA will have published its revised Terms of Reference. This will outline what is in scope and the direction of travel. Expect many headlines and more questions than answers at this stage. It remains important for the market to not become too distracted initially; FCA market studies typically comprise of different stages and can take years to conclude. For example, the FCA’s market study on GI launched in 2018 yet it wasn’t until 2021 that we saw finalised rules. Therefore, while significant, it is imperative that it remains business as usual and we continue to focus on protecting more people in the UK.

© 2025 Association of Mortgage Intermediaries Limited.

AMI is the trading name of The Association of Mortgage Intermediaries Limited which is a company limited by guarantee, registered in England and Wales under the Companies Acts with number 7982341. Our registered address is Celixir House, Stratford Business & Technology Park, Innovation Way, Banbury Road, Stratford-upon-Avon, Warwickshire, CV37 7GZ.

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