Why I Built Clerica (and Why Time Is the Real Protection Gap)
The FCA published the final report on its pure protection market study on 21 September 2026.
If I’m honest, I was expecting bigger changes; the industry has been threatening commission structure changes and replacement business. Fortunately, this isn’t the case, but some big areas have been highlighted:
The first one is the one I think every adviser should be paying attention to.
The FCA found that 58% of people don’t hold any protection products. And 59% of those have never even considered their protection needs.
Just to put that into perspective. More than half the country would be relying on savings, the state and family if they died, got seriously ill or couldn’t work. And most of them haven’t given it a second thought.
That’s the “protection gap”, and it’s now the FCA’s main focus for the next 12-18 months.
You could read that number as a failure of the industry. I read it as the biggest opportunity we’ve got.
Those people aren’t saying no to protection. Most of them have never been asked properly.
And a lot of them are already sat in front of an adviser. They’re getting a mortgage, remortgaging or moving house. The FCA actually says it was encouraged by advisers who prompt customers about the risks of illness, death and loss of income when they’re arranging a mortgage. Which is nice to hear, because that’s the job.
The report sets out a package of work to get more people thinking about cover:
Number 4 is the one that made me smile. The FCA is basically saying some firms are so worried about compliance that they’re not having the conversation at all.
I get it. When every protection case comes with a letter, a file check and the risk of a complaint, it’s easier to stick to the mortgage and move on. That’s not a criticism of advisers. It’s what happens when the admin around a sale grows and the time to do it doesn’t.
This was the one I was watching most closely.
The FCA estimates around 19,000 customers a year may be affected by unnecessary switching (roughly 0.1% of policyholders). The heavier measures it floated in the interim report (adviser reference numbers, extra data reporting, lead generator reporting) have all been dropped. What replaces them is supervision of the firms doing it.
My take is that a replacement file now needs to stand up on its own. A clear, client-centered reason and a fair comparison of what they’re giving up. “Cheaper” with nothing else written down is going to look thin.
The report also talks about a “beneficiary gap”, which is the percentage of policies not placed in trust or set up without named beneficiaries.
The FCA found that firms do offer trusts at point of sale, but it’s inconsistent. It wants to see more trusts offered and more taken up.
I’ve been saying this for years. I’m a strong advocate for life cover working alongside a Will, because when a policy isn’t in trust (and there’s no up-to-date Will) the money ends up in the estate, it waits for probate, and sometimes it goes to the wrong person entirely.
It’s also why Clerica is currently building a Will writing tool to sit alongside the protection system, so the two conversations can happen together.
So in light of the report, we’re building a trust builder into Clerica. It will include:
More on that soon.
Income protection had the lowest claims acceptance rate of the protection products, at 86%. The FCA didn’t find widespread fair value concerns, but it’s keeping an eye on it.
For advisers this comes back to explaining the product properly. Definitions, deferred periods and what “own occupation” actually means for this client.
It’s not a huge surprise that most of this report highlights that we aren’t selling enough protection, and that more clients need to be spoken to about it…
The good news is – this is exactly why I built Clerica. It makes this as easy as possible…
Take your existing client fact-find and it will create you a protection recommendation in seconds. Branded and ready to present to your client, or to amend at the click of a button. All fully backed-up with a detailed recommendation letter.
It also flags the gaps (if you’ve only recommended life cover and there’s nothing for illness or loss of income, it’ll point that out). And it records the risks discussed, options explained and anything the client chose not to take, so your file stands up if anyone asks.
Less time on the letter means more time for the next client. And more mortgage clients actually being asked about protection is how we start closing that 58%.
If you’d like to see how it works, book a demo. Or just drop me an e-mail and I’m happy to chat through the report itself.
