Report serves the interests of non-advising sellers like Tesco

From Kevin Carr

The report into the selling of life insurance published by Consumer Intelligence is clearly drawn up to further the cause of Consumer Intelligence’s main clients, the non-advising protection sellers such as Tesco, Direct Line and many others.

I believe this report to be both contradictory and flawed in its understanding of the market. For example, the report misses several important points such as the fact that consumers automatically lose their right to seek redress from the Financial Ombudsman when they buy without advice.

How did the report miss this? If 125 mystery shoppers couldn’t tell, how does the FSA expect consumers to know? This is the real issue consumers should be warned about. Also, the report naively focuses on price but not value for money. There’s little point saving 50p a month if you buy the wrong policy, or if 40% of the sum assured is taken in Inheritance Tax.

By applying the principles of car insurance to life insurance we believe the report does readers no favours. Life insurance is not like car insurance. The purchase of car insurance is compulsory and your car won’t arrive with 40% missing because of taxation.

The report misses the point that making a buying mistake in protection is far worse than any other area of financial services, first because the emotional consequences involve ill health or death, second because the sums assured are often far greater and third because, unlike any other financial services product, if you make a mistake you can switch but in protection when you realise the mistake it’s too late to switch.

Although LifeSearch is frequently praised in the report, the few seeming criticisms of us are mostly examples of exemplary individual advice which should be praised and would have been if the researchers understood the market. Yes, we often tried to recommend other policies. This is because no adviser should sell a customer an unsuitable product just because they ask for it.

The report is contradictory on this matter. For example, it takes the FSA example of measuring how much cover is needed by looking at income but the report does not take account of Family Income Benefit. I wonder why. Perhaps it’s because the report was commissioned by non-advisers who sell only the most profitable products and not the most suitable.

Regarding price, our price promise is cast iron and has been for the seven years since we launched. Find a better quote and we will match it. But far more importantly you will have the right product, in trust if needs be, with the added support of LifeSearch’s counselling service, which no non-advisers provide. Somehow, even though this service is promoted in every pack, the report missed this as well. Again, I wonder why.

The report is an attempt by the huge profit-making non-advisers to devalue advice in a market they wish to commoditise and dominate, to the detriment of consumers.