Britain’s financial watchdog wants insurers to do better. The Financial Conduct Authority dropped its interim findings this week, and the message is pretty clear: too many people can’t get the protection insurance they actually need.
More than half of UK adults don’t have pure protection products, according to the FCA’s competition review. That’s a massive gap when you think about what happens when someone dies or gets seriously ill. The regulator found the market works fine for people who already have policies, but getting new coverage remains tough for millions. Consumer awareness sits at rock bottom levels. Many folks simply don’t know these products exist or why they’d need them. Payment ability creates another hurdle, and plenty of people just don’t understand what they’re buying.
The numbers don’t lie here.
Graeme Reynolds runs competition at the FCA and also handles insurance duties on an interim basis. Reynolds said the products can “ease familial financial burdens during critical life events” but admitted competition only helps some consumers. “Many remain underserved,” he told reporters. The FCA plans to work directly with insurance companies to narrow the gap and help people manage their money better.
Some firms already show good value for customers, the FCA noted. The regulator will crunch updated 2025 data for its final report, which should land in Q3 2026. Product switching also needs work – the FCA wants to make sure people can actually find coverage that fits their specific situations.
Industry feedback closes March 31, 2026.
Pure protection insurance covers three main areas: life insurance, critical illness coverage, and income protection. These products don’t include savings or investment parts – they just pay out when bad things happen. Families need this stuff to handle financial shocks from death, serious illness, or losing the ability to work. But awareness remains terrible across the board.
The FCA also wants to streamline how people buy these products. Right now the sales process is pretty complex, which probably explains why uptake stays so low. Simplifying the steps could help consumers understand what they’re getting and actually complete purchases. And insurers need to do better at educating potential customers about what these products can and can’t do.
Clear communication matters here, the FCA said. People can’t make good choices about their financial security if they don’t understand the options. The regulator expects insurance companies to participate in the consultation process that’s running through March. Industry feedback will shape the final recommendations.
Fresh 2025 data will drive the FCA’s final analysis. The authority wants to use current market information to back up any changes it proposes. On January 30, 2026, the FCA repeated its commitment to making protection products accessible to more people, especially those who can’t get coverage now.
Insurance providers and consumer groups have until March to weigh in. The FCA particularly wants insights from these stakeholders since they see the market from different angles. Premium costs are getting scrutiny too – the regulator is checking whether prices create barriers for potential policyholders.
Marketing strategies also need examination, according to the FCA. Too many consumers still don’t know about protection product benefits. Working with insurers to boost marketing efforts could increase awareness and get more people thinking about these financial safeguards.
The FCA’s push fits into broader regulatory work on financial inclusivity. By January 2026, the authority plans workshops between insurers and consumer groups. These sessions will focus on specific barriers and targeted solutions for better product access.
Digital platforms might expand consumer reach, the interim report suggested. Online tools could simplify purchasing and make protection products more visible to potential buyers. The FCA is exploring partnerships with tech companies to pilot digital initiatives that streamline insurance offerings.
Stakeholder feedback will be crucial for the final report. Major insurers like Aviva and Prudential are expected to share market experiences and insights. Their input will help shape FCA recommendations and make sure proposed measures actually work for both consumers and the industry.
But the regulator didn’t specify exactly which digital partnerships it’s considering or give timelines for the pilot programs. Those details remain unclear as the consultation period continues. The FCA also hasn’t said how it will measure success if insurers do improve access to protection products.
Premium affordability studies are ongoing, though the FCA hasn’t released specific data on how pricing affects different consumer segments. The authority is examining whether current cost structures make sense given the low uptake rates across the market.
Consumer advocacy groups have started submitting preliminary feedback, but most formal responses won’t arrive until closer to the March deadline. Early indications suggest support for streamlined sales processes and better consumer education, though industry sources say implementation details matter more than broad goals.
The final report should provide concrete recommendations rather than general guidance. Insurers want specific steps they can take to address the access gap while maintaining profitable operations. Consumer groups are pushing for affordability measures and simplified product comparisons.
Market data from 2025 will show whether recent trends continue or if new patterns emerge. The FCA expects this information to strengthen its final analysis and recommendations when the comprehensive report drops in Q3 2026.
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