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‘Outcomes need to be the focus, not just sales process’:
Health advisers on Consumer Duty impact

Published: 11/07/2023

We asked three leading health advisers to tell us how Consumer Duty will impact the PMI market.

With the deadline of the 31st July fast approaching, there’s no escaping the new Consumer Duty regulations. In what will arguably be a ‘paradigm shift’ in the way firms are expected to treat customers, Consumer Duty sets much higher standards of customer protection and is intended to drive improvements in financial products and services, including private medical insurance, for consumers.

As demand for PMI has increased in recent years, the whole industry has a responsibility to ensure consumer needs are being met and that good outcomes are being delivered.

As a product provider this is already reflected in developments like Vitality’s decision to disregard medical history for mental health talking therapies, or our focus on incorporating a more preventative approach to healthcare and recovery pathways.  

The new regulations apply as much to advisers though and we’ve already covered a number of topics relevant to the advice market, such as what fair value and good outcomes look like and the significance of the cross-cutting rules

What impact do you think Consumer Duty will have on the PMI market and PMI advice?

Claire Ginnelly, Vice Chairperson Association or Medical Insurers and Intermediaries:

In theory, it should strengthen the partnership approach between advisers and insurers.

All firms must demonstrate fair value to a consumer and need to deliver good customer outcomes to retail customers. Advisers and insurers may need to work closer to ensure this is delivered. For example, can an adviser evidence that the insurers they work with have considered this in their product design.

It takes regulation a step further from where we are currently, and this should be good for the consumer.

Ian Sawyer, Commercial Director Assured Futures:

Obviously, I can’t speak for others, but it has had a significant and positive impact on us as a distributor. It has challenged us to not just 'Treat Customer Fairly', but to test consumers understanding of our online journeys and our adviser letters and documentation.

We contracted a consumer panel (non-clients) to help us work through and test our comms and has resulted in some really worthwhile improvements.

Brian Walters, Managing Director Regency Health:

I'd like to think that our market is generally good at meeting its regulatory obligations, so I envisage evolution rather than a sea-change.

Do you think Consumer Duty will lead to big changes in the way PMI advice is delivered to clients, and if so what? 

Ian Sawyer:

Not for good brokers and advisers, however it should enhance the way we all think and deliver information about certain policy features, such as hospital lists and guided options.

Brian Walters:

The Duty places a significant emphasis on client communications and some of the technical aspects of PMI can be difficult for consumers to grasp. Brokers will need to demonstrate that their advisory documents are clear, concise, and give their clients the opportunity to make an informed decision.

Claire Ginnelly:

If an adviser is already doing everything they should in terms of the advice they give to a client, the impact of the Duty shouldn’t be too onerous.

I believe it does give clarity as to what is expected of everyone in the chain (manufacturer and distributor), but if you are already giving good advice in line with the regulators current framework it shouldn’t be a big change.

The final guidance is clear in that in some instances meeting existing obligations will be enough to demonstrate compliance with the products and services or the fair value outcome rules. Consumer Duty is based on good customer outcomes and this should be applied in all aspects of your customer dealings and not just when a policy is sold. Firms need to ensure the consumer is at the heart of their business and the Senior Managers need to ensure this is embedded in their business.

Do you see any opportunities for Consumer Duty to change the way PMI products are designed to meet consumer needs? Is this necessary?

Ian Sawyer:

I hope that the regulations and principles will provoke providers to make it easier to switch from insurer to insurer, because that is the right and good customer outcome.

Claire Ginnelly:

The Duty is clear that focus needs to be on all consumer outcomes and not just on the initial sales process. It might make insurers consider how product design impacts existing customers and is it fair in line with how new customers are treated. As an example, is a typical no claims discount scale offered by many insurers clear to new customers and is it fair to existing customers when they make claims.

Are there any aspects of the new regulations that stand out to you as being particularly relevant to PMI advice?

Claire Ginnelly:

I can see how the new regulations are important across all aspects of insurance advice, but the consequences of poor advice when you are dealing with someone’s health could be greater.

To find out more about how Vitality can support you in understanding the new
Consumer Duty regulations and wider business quality guidance click the link below:

Where to next?

  • What is fair value?

    Steve Allibone, Group Compliance Director for Vitality, explores one of its core underlying outcomes – ‘price and value’ – and considers what the industry can do to ensure it is being delivered in the right way.

  • What do 'good client outcomes' look like?

    At the heart of the new Consumer Duty regulations is a new consumer principle requiring firms to deliver ‘good’ client outcomes. Vitality Group Compliance Director, Steve Allibone weighs up what this might mean for advisers.

  • Cross-cutting rules and how to avoid 'foreseeable harm'

    In the next instalment in our series, Vitality Group Compliance Director Steve Allibone investigates the impending ‘cross-cutting’ rules and what they might mean for financial advisers.

  • Insights Hub

    Our Insights Hub brings you our range of adviser content - from video series to articles & blogs.