While this one is even less closely linked to traditional protection products such as life insurance, critical illness and income protection, it once again highlights a problem within the bancassurance industry.
The alleged mis-selling of interest rate protection uncovered by Sky News brings yet another question mark over the suitability of banks to provide independent and unbiased financial advice.
So, in theory this news should be a good thing for IFAs.
However, with PPI still making the headlines – today COVER reported on the aforementioned deadline for Barclays, RBS and Lloyds groups to settle their held-over complaints – protection insurance as a whole is still grabbing public attention.
As Defaqto’s Ben Heffer noted, it is time for a line to be drawn under the whole affair.
If only that were possible.
As soon as one saga is close to being cleared another rears its head.
The Financial Ombudsman Service (FOS) recently exclaimed the industry appears “addicted” to mis-selling scandals.
Certainly the latest revelations will have done nothing to appease that view for many, including the general public.
And with the insurance industry’s terminology being rated as the most complicated to understand while leaving many customers confused and as a result avoiding purchases, there is a sense that it does not help itself much.
All this means that IFAs focusing on the protection market can find themselves swimming against a tide which only appears to be getting stronger and developing more undercurrents.
Is it any wonder the individual retail market is often described as ‘stagnant’ at best and, at worst, ‘slowly dying’.
While this particular development is still in its infancy, the fear is that this unrelated product could see the traditional protection products once again dragged through the mire.
The key thing for IFAs to do is emphasise their independence from the bancassurance networks and highlight the real need that true protection products serve, rather than often unnecessary ones targeted by products such as these.
Owain Thomas is senior reporter for Mortgage Solutions’ sister title COVER
