Brokers and protection specialists have shared their views on how and when protection advice should be provided, and whether it can be overlooked during busier times.
One has suggested that people in less affluent towns and cities of the UK are more likely to be protected than those in wealthier areas.
Dave Corbett, head of protection at Protection 1st, said: “It’s not just the busier brokers that often don’t focus enough on protection, but the ones who deal with larger property values and therefore don’t need to top up the value per case.
“In my experience, a local mortgage broker in Consett is much more likely to look to protect their client than one in Chelsea, just because of the income generated by the mortgage.
“There are, of course, exceptions to every rule and other factors at play. Consumer duty will hopefully level this out as will some of the more innovative training available to advisers on the skills required to write decent protection.
“Market conditions like we have currently will always see a spike in conversion but imagine the number of clients that would be protected if more advisers were protection ‘match-fit’ when the mortgage market slows.”
Another protection specialist, Sandra Feuell, director at Feuell4Life, agreed with Corbett that protection can be overlooked when brokers are busy: “Many mortgage brokers can overlook protection when they are busy and can be tempted to move onto the next enquiry.
“Protection should be integral to the mortgage process as it is far more important than to be only considered when not busy.
“Ensuring that the right protection is in place can seem complicated and time-consuming, as there are so many protection providers offering the same policies but with varying terms and conditions.
“For this reason, a broker could be worried about not giving the right advice and providing a policy that will not pay out when needed.
“Providing life cover is the easiest option and most understood by the consumer but does not protect against the impact of long-term sickness or critical illness that are a higher risk.
“Referring to a trusted specialist or having a protection adviser in a firm is now becoming more popular.”
Ranald Mitchell, director at Norwich-based Charwin Private Clients said Consumer Duty could be a game-changer for the protection market.
He said: “Brokers are duty-bound to prevent foreseeable harm under the new Consumer Duty rules and protecting customers from identifiable, vulnerable positions should be part of the conversation no matter how busy they are.
“By simply addressing these shortfalls, protection sales will increase and clients can make conscious decisions about what risks they wish to cover, and which ones they will take the chance on.”
Rhys Schofield, brand director at Belper-based Peak Mortgages and Protection, said: “A good broker always makes protection a key part of their process right from the first appointment.
“The temptation for overworked brokers is that they cut corners and do their clients a disservice by simply focusing on the mortgage.
“Ultimately it comes down to being disciplined with how you conduct business and being big enough to pass on additional cases once you’ve hit the number of new cases you can handle in a month.”
Stephen Perkins, managing director at Norwich-based Yellow Brick Mortgages agreed with Schofield: “A broker has a duty of care to look after their client. Any broker who saddles a client with debt and does not appropriately discuss the need for protection is failing in their responsibilities.
“This is common where an adviser is overly busy with mortgage applications, or has poor processes in place.
“It should be a requirement for every client to have had protection advice before completion, and if the mortgage adviser cannot do this, they should refer the client to a protection specialist for advice.
“I wouldn’t want to be the broker who didn’t talk about protection as I was too busy when the client called some years later when in need wondering if they have cover.”
Emma Jones, managing director at Frodsham-based Whenthebanksaysno.co.uk, suggested the obvious solution is to have protection specialists in-house.
She added: “Protection can be put to one side within the industry, which is why we have in-house protection specialists to ensure these conversations are had with every client to protect them from any risk.
“The risk is there from the moment they apply for a mortgage, and it is so important that insurance shortfalls are also addressed.
“Some providers give free life cover for mortgages whilst waiting for completion, which is a fantastic offering that needs to be discussed more.”
Scott Taylor-Barr, financial adviser at Barnsdale Financial Management, accepted that market conditions can influence protection activity: “During a really busy period, especially with lots of rate volatility and more so when those rates are increasing, securing mortgage deals will take precedence for that period.
“However, when that period passes, and all storms eventually pass, brokers will circle back around and re-visit those clients and their protection needs.
“This means we tend to see protection application levels fall as mortgage application levels rise and then, as the mortgage application volumes fall again, protection application volumes rise.
“Obviously, this is a very generic overview and some brokers will maintain volumes throughout, whilst others may always have poor protection volumes.
“For those who don’t properly engage with protection with their clients, I would urge them to have a referral partnership with a protection specialist.”
Bob Singh, founder at Chess Mortgages said protection has to be addressed at outset to give it the gravitas required, and suggested a two-meeting approach is essential: “If a broker doesn’t address protection at outset, specifically the fact that it’s an integral part of the mortgage and not an optional add-on that’s talked about post-offer, then in the client’s eyes it’s likely to lose its relevance or importance.
“Busy brokers may then be more focused on the next mortgage deal than calling the client back in to talk about the protection.
“A two-meeting structure is essential. With Consumer Duty and TCF, advisers would be well advised to review their procedures, document all discussions and retain key notes and documents on file.
“Claims against brokers are more likely to be on unsold protection than mis-sold mortgages so any refusal to take cover should be documented. Busy brokers should be looking to add a protection dept to the mix to serve clients better.”
Gary Boakes, director at Salisbury-based Verve Financial said that protection being put on the back burner is an age-old problem in the industry.
He said: “The graphs and stats show that this has been a problem for years. A mortgage is something the customer wants and needs and is the easier sale, while protection has to be sold in most instances so it’s easier to put it on the back burner if you are busy.
“It is an old age problem. However, with Consumer Duty there is now more pressure on advisers to either find the time to have those in-depth conversations about protection or to refer it to protection-only firms or employ in-house protection consultants.
“Across one of the largest mortgage networks in the UK, mortgages have fallen by 20% this year but protection has increased by 17% — coincidence?”
Meanwhile, Simon Bridgland, director at Canterbury-based Release Freedom urged brokers to advise on protection from the get-go, but suggested some may feel it could threaten the mortgage sale: “Unfortunately, some brokers, if busy, will perhaps be a little lazy and not impress the urgency of protection on the client they are advising.
“I don’t believe brokers generally make a conscious effort to not advise their clients to take protection but over the years some have skimmed over protection to deal with the more familiar or straightforward task of the mortgage.
“A good broker should be advising on and discussing protection right at the get-go.
“Some advisers may feel they are potentially jeopardising a mortgage “sale” if they appear to put pressure on a client to discuss, let alone take, cover. But if they line up the process correctly in the first place then protection won’t be any form of hurdle in their client discussions.”
Gary Bush, financial adviser at the Potters Bar-based MortgageShop.com, concluded: “We do find that some advice firms take their foot off the protection pedal the busier they are, and this is especially true for the more paper-based companies.”
