One year ago, after the regulatory changes that changed the charging structures on income and loan protection products in the United Kingdom, Income Protection (IP) products were expected to rocket in popularity, according to numerous surveys. According to the most recent survey this year, the rocket never left the ground; it would seem confusion between IP and the widely mis-sold Payment Protection Insurance (PPI) is to blame.
Where PPI covers individual loans and is paid to the lender, IP covers an individual and pays out a tax-free percentage of an individual’s income if that person becomes sick or injured and is unable to work. The way the person spends the money is an individual choice. With the increased demands for financial advisers to diversify and the negative publicity involved with the PPI scandal, it was widely thought financial advisers would be pushing IP as a way to reduce risk. However, financial advisers have been shying away from any form of protection products as the most recent survey indicates.
Financial Adviser, who conducted the survey of 194 advisers in the United Kingdom, said 137 or 70.62 percent of the advisors replied zero when asked; what percentage of your clients specifically asked about buying a protection policy? The sector’s ambiguity and negative associations appear to be holding it back. Thirty-five of the 194 advisers or 18.04 percent said one-quarter to one-half of their clients asked about buying protection and only 11 respondents or 5.67 percent said one-half to three-quarters or more of their clients asked about it.
“In my opinion it’s something that needs to be brought up by an adviser otherwise it’s unlikely to feature on a client’s radar. Occasionally a potential client will ring up about it because they’ve seen the devastating impact of a family friend dying without protection in place,” said David Gibson, director of County Londonderry-based Gibson Financial Planning.
The PPI scandal led to a mass crackdown on banks and insurance companies with fines that have already surpassed £10 billion. Although IP is a different product it has been caught up in the storm. Director of London-based Drewberry Insurance, Andrew Jenkinson said, “I would say a big proportion of losing clients comes down to the fact that they’ve seen aggregator websites like moneysupermarket.com which dresses up PPI as IP. It sells short-term PPI and markets it as IP. This is a really big issue. The aggregators keep calling it PPI and the regulator is not sure where the line is.”
About Dial4PPI.co.uk
Dial 4 PPI (http://www.dial4ppi.co.uk) employs solicitors that take on some of the biggest financial institutions who have mis-sold payment protection on your behalf. We aim to ensure your payment protection insurance claim is successful and you can claim back the money you deserve.
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