FCA launches study into fair value in the pure protection market

The FCA has launched a market study into the effectiveness of the distribution of pure protection insurance products.

While the FCA has seen indications of good outcomes for consumers, and low complaints figures, there are concerns that commissions used to sell pure protection products may affect the outcomes consumers receive, and the products’ value or design.

The study will examine whether the distribution of these products works well with the FCA’s operational objectives, including whether competition is working in consumers’ interests. It will also consider whether the structure of commission encourages advisers to suggest switching that may not be beneficial for consumers, and whether premiums are being raised by insurers in order to pay a higher commission to intermediaries.

An interim report with initial findings and next steps is anticipated around the end of 2025, and the FCA expects to publish several analyses throughout 2025 to share its latest thinking.