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Are brokers breaching TCF rules by ignoring protection? MCI Mortgage Club

by: Phil Whitehouse, managing director, MCI Mortgage Club
  • 20/10/2016
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Are brokers breaching TCF rules by ignoring protection? MCI Mortgage Club
Protection can often be an afterthought for many brokers when advising on mortgage products, but those who don't consider this cover at all for their clients could be in breach of TCF rules, writes Phil Whitehouse.

There’s a discussion going on at present surrounding protection. It’s a conversation that has been happening in the general insurance sector for many years but, from what I’m seeing, it is only now starting to catch the attention of the mortgage industry. The topic in question is this: are brokers breaching TCF (Treating Customers Fairly) rules by ignoring various protection products? That’s certainly the view of some of the thought leaders in this sector.

The reasoning behind this argument makes sense. By helping a customer to secure a large mortgage debt, but not putting any provisions in place for what could happen if that person were to get ill and become unable to work, is a broker not leaving that customer in a vulnerable situation?

It’s something the industry is starting to take notice of. Indeed some networks and large brokerages are ‘de-authorising’ the brokers that do not sell life insurance and putting in place a system for making the broker refer his customers for advice.

Such a move should be beneficial to customers as long as they follow through with the referral. Indeed, I think part of the problem when it comes to protection sales is there is a sense of apathy on both parts. Customers are not necessarily chomping at the bit to take out protection and brokers are, in many of their own words, “too busy”. A poor excuse by anyone’s standards.

Often I hear of examples where brokers have all but told borrowers to source their own insurance, knowing full well they are likely to either use a comparison site (which rarely gives the best outcome) or ignore protection and general insurance altogether.

It’s time to make protection a key part of your business offering. Rather than look for difficulties or time constraints, determine what you can do to help you to sell a range of protection products to customer needs more effectively.

Technology can be useful. A CRM system that allows you to make your recommendations across a range of products easily can save time, particularly if the forms can be pre-populated once the information has been keyed in initially. A good CRM system will have links to third party systems to get various quotations that will then return quotes to discuss with the customer.

You can also enlist the help of technology to diarise follow-ups. It’s not always possible to discuss all insurance options at the initial interview but as long as you make a point of following up the case you’re staying within TCF boundaries.

There are specialist companies out there who will create user-friendly quotation systems and takeover the admin and processing of the case so that the broker spends more time selling rather than on time-wasting admin tasks.

If you are ignoring protection because of a lack of confidence in the area you can seek specialist training from outside sources to ensure you are equipped to give customers the best possible advice for their wide range of protection needs.

If you’re ignoring it as a result of lack of interest, then you may need to question whether you’re really doing right by your client.

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