Reacting to the article FCA rules out major intervention in pure protection but flags areas for improvement, Mark Graves, chief executive of Auxilium, said: “It’s largely gratifying to see that despite my article [More must be done to tackle job-hopping protection advisers who cancel and rebroke policies] being written well in advance of the release of the FCA’s Pure Protection Review interim report, its findings corroborate all of my points.
“However, it isn’t yet going far enough, and presents much of what we – who consider ourselves experienced and expert in protection – already know. It is good to see the pricing issue picked apart, with all of its component parts laid bare – ‘Loaded premiums do not currently, on average, result in higher premiums paid by consumers’ – having been a stick used by those panels who call themselves ‘non-loaded’ to beat ‘loaded’ panel holders with.”
Graves added: “I especially appreciate the explicit comment suggesting that higher premiums may be justified by better quality advice – although equally pleasingly, the report notes that a loaded premium does not, in itself, result in an actual higher price to the consumer. Who knew? Well, we did… but that’s a topic for another day.
“I look forward to the opportunity to provide feedback to the FCA on the report and welcome a more in-depth study into how to reduce the sort of churn that is purely driven by poor ethics and greed. I feel, having read the report, more than ever before that the individual registration numbers (IRNs) are the way to go.”
Mike Pritchard, chair of Elixir, whose firm’s experiences were used to inform the regulator of churning practices [page 33], added: “Is there a more effective way of tracking advisers to reduce this problem?
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“If advisers moving from firms, and specifically advisers who create the chaos, are also enabling their previous firm to fail through accelerated lapse and clawback risk, a better way to track these ‘movers’ and prevent the chaos is required.”
Pritchard added: “Insurers can only do so much alone; if the ‘at risk’ firms that see advisers move can make the insurer aware early, insurers are able to coordinate and track movements and, importantly, understand any associated re-broke risks.
“Even more critically, having FCA-allocated IRNs that move with the adviser as the only recognised identifier to operate in the protection (or wider) space could help to assuage the issue more successfully.
“A system based on traceable advisers (eg, IRNs), who are proud to be part of this industry, have nothing to hide and do not cause distress when moving has to be a better way forward?”
