Emma Vaughan, Head of Protection and Health Solutions, Simplybiz

What the FCA’ s market study means for directly authorised advisers

The UK’ s pure protection insurance market is facing a new chapter. The Financial Conduct Authority( FCA) launched a sweeping market study aimed at evaluating how well this sector serves consumers. For directly authorised financial advisers, this is more than a regulatory exercise- it’ s an opportunity to reflect, adapt, and reaffirm the value of professional advice in a market that touches millions of lives.

At the heart of the FCA’ s focus are products like; term life assurance, critical illness cover, income protection, and whole-of-life policies. These are the financial safety nets that families rely on during life’ s most difficult moments. Yet, despite their importance, concerns have emerged around how these products are distributed, priced, and understood.

The FCA’ s study is driven by questions of fair value and competition. Are consumers getting policies that truly meet their needs? Are commission structures distorting adviser behaviour? Is the market inclusive enough to serve vulnerable groups? These are the questions that advisers must now grapple with- not just in theory, but in the day-today realities of client conversations and business models.

ADVISERS AND INSURERS ALIKE ARE URGING THE FCA TO TAKE A BALANCED APPROACH.

A welcome review – with caution The industry’ s initial reaction to the FCA’ s study has been broadly positive. Many see it as a timely opportunity to address long-standing issues such as underinsurance and opaque commission arrangements. There’ s a shared hope that the review will lead to outcomes that benefit both consumers and the industry.

But that optimism is tempered with caution. Advisers and insurers alike are urging the FCA to take a balanced approach- one that fixes what’ s broken without dismantling what works. Protection specialist Kevin Carr summed up the mood well when he described the FCA’ s process as“ robust and sensible,” while expressing hope for outcomes that are“ positive for both consumers and the industry”.

This cautious optimism is rooted in several factors. First, the study aligns closely with the principles of Consumer Duty, which already require firms to deliver good outcomes and fair value. Second, there’ s a genuine desire across the industry to close the protection gap- the large swath of UK consumers who remain uninsured or underinsured. Third, the FCA’ s proactive engagement with stakeholders has fostered a sense of partnership rather than confrontation.

6 | PROTECTION ADVISER | AUTUMN 2025 |