After many years of the regulatory equivalent of a Gaelic shrug towards the protection market, the Financial Conduct Authority has announced a forthcoming study into the sector taking in many areas, perhaps most notably, the three Cs: commission, competition and charging.

Understandably, this has set many boardrooms a flutter, as the market’s biggest and best advisers, distributors and providers begin to consider the impact of the study and its findings on their business model.

There will be some who are fearful. Any action from the regulator tends to cause worry. Some are thankful, having been calling for an increase in engagement in protection from the regulator for some time.

There are always processes that can be done better, to deliver better products, better services and better outcomes to customers

There are others, like me, who are hopeful. Hopeful that this study will once and for all shine the light on protection that I, and many others like me, think it deserves.

Name a perfectly functioning market and I’ll prepare to be astounded. Nowhere across financial services, retail and beyond will you find a market perfectly in sync with its customers or internal market stakeholders.

There are always processes that can be done better, to deliver better products, better services and better outcomes to customers.

The fast-food market could easily reduce salt, sugar and fat in its foods and maintain its revenues and standing. Indeed, the sugar tax on soft drinks has proven it possible. But it is yet far from common practice.

The UK is one of – if not the – most price-competitive market in the world. We offer cover at a low price – some might say too low

Closer to home, the general insurance  market could, despite regulatory intervention in recent years, ensure all its products deliver value for money on an ongoing basis.

Protection, too, has aspects that could be changed to improve the market and the outcomes it delivers customers. Products could be simpler to understand and deploy to underserved markets. Cover could be more in keeping with modern changing lives – able to flex according to circumstances. Processes at application and claim could be improved from those which, today, are often still legacy; often manual and sometimes opaque.

However, there is masses to celebrate, too. The UK is one of – if not the – most price-competitive market in the world. We offer cover at a low price – some might say too low. We are also continually seeing providers entering new channels and new product lines – helping drive more choice.

This is the growth we need. This is the growth a financially resilient society needs

We have come a long way on process simplicity, too. Yes, we have more to do but insurers, distributors and advisers now have better, more streamlined processes to serve their protection clients – from sourcing the right product at the right premium to accessing GP helplines from the growing set of value-added benefits, now included as standard within most policies.

This, in itself, should be celebrated – providers have made the important step to offer more holistic, ‘always-on’ policies capable of delivering value even when their core purpose (to cover a claim) isn’t required.

Let’s not lose sight of these facts and continue to share them, both together and in public. A connected market is a better market. A positive discourse is better than a negative discourse. Let’s celebrate the things we do well, in private and in public.

As we begin to predict what the study will focus on and what the outcomes for the market will be, I remain hopeful. Ours is a market which performs an important role in society, a role we should ensure we and those who engage with it always appreciate.

Like most markets, there are things we could do better. Many of these things would help us, not necessarily to do more for our customers but to do the same for more customers. This is the growth we need. This is the growth a financially resilient society needs.

Let’s celebrate protection.

Paul Yates is product strategy director at iPipeline

THE Department for Work and Pensions (DWP) has issued a major update on the thousands of women affected by a state pension blunder.

Fresh figures show that almost 120,000 women have been short-changed on their state pensions and are owed up to £11,905 each.

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The DWP has been undertaking a correction exercise since 2021 to fix these errors.

This blunder affected married women whose husbands reached pension age before 2008, as well as widows and women over 80.

They were entitled to an ‘enhanced pension‘, which could have boosted their payments by up to 60%, but they didn’t receive it at the time.

Your husband must have turned 65 before March 17, 2008 to qualify.

The DWP has now completed payouts to married women and those over 80.

They’ve paid £250.6million to 45,907 married women, with an average payout of £5,591.

Women over 80 have received £68.2million across 33,437 cases, with an average of £2,202 each.

As of November 2024, the DWP is still issuing payments to widows affected by the issue.

So far, £417.2million has been paid to 39,706 widows, with an average of £11,905 each.

It means that in total, 119,050 women are owed up to £11,905 each from the DWP.

The DWP added that it expects to issue payments owed to all remaining widows by the end of 2024.

However, this isn’t the only type of state pension underpayment blunder affecting retirees.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The number of people who have been underpaid their state pension is shocking. 

“And this isn’t the final number either, because the DWP hasn’t finished uncovering the full extent of underpayments yet.

“The government is still carrying out a review, going through everyone who might have been underpaid, so you don’t need to apply to be part of this process.”

The DWP will contact you directly if you’re affected by the error.

You must respond to any communications to ensure you receive a repayment.

UPDATE ON OTHER ERRORS

The government has also shared progress on correcting Home Responsibilities Protection (HRP) errors.

From January 8 to September 30, 2024, the DWP identified 5,344 cases of underpayment, amounting to around £42million in total arrears.

This issue affected individuals who took time off work to care for children or someone with a disability between 1978 and 2010.

The problem arose because child benefit claim forms submitted before 2000 often didn’t include a National Insurance number, meaning the relevant HRP information wasn’t transferred from the child benefit system to the National Insurance system.

HRP would have added credits that counted towards their state pension, much like National Insurance credits work today.

As a result, thousands missed out on state pension benefits worth an average of £5,000.

If you have missing payments, you can complete a CF411 form to add the credits to your record.

You might also be eligible to apply if any of the following situations apply to you:

• You were caring for a child while your partner claimed child benefit instead of you.
• You were receiving Income Support because you were caring for someone who was sick or disabled.
• You were caring for a sick or disabled person who was claiming certain benefits.

If your partner claimed child benefit, you might be able to transfer the HRP credits, but they will need to agree.

For example, if you were a stay-at-home parent and your working partner claimed the child benefit, they can transfer the credits to you.

Your payments will be recalculated if you have missing HRP credits and have already reached state pension age.

Any missing money will be backdated and paid to you as a lump sum.

An expert recently revealed that more pensioners could be owed cash but have been unable to claim.

TRACK DOWN ERRORS

LCP has developed an online tool to help people understand what state pension they are entitled to inherit on top of their own state pension at go.lcp.com/inheritingstatepension.

A tool previously launched by the company to help married women check for underpayments had over one million visits.

The DWP also has a tool to help those receiving the new state pension assess their eligibility for inherited state pension amounts at gov.uk/state-pension-through-partner.

There is also a guide on inheriting or increasing a state pension at gov.uk/new-state-pension/inheriting-or-increasing-state-pension-from-a-spouse-or-civil-partner.

A DWP spokesperson said: “We want to ensure pensioners receive all the support to which they are entitled and have a tool to help them understand what state pension they can inherit.

“Delays can occur to a customer state pension award when not all the information we need is provided.

“In these cases, we will make a state pension award based on the customer’s own national insurance record until we have the required information.

“Once we have the necessary documentation, we will then revise the customer’s claim as soon as possible.”

Firms seeking to operate commercial pensions dashboards services (PDS) have no timescale when this will happen despite the Financial Conduct Authority publishing rules they must follow when designing and operating them.

FCA set out rules for pensions dashboards service firms in a policy statement published yesterday (7 Nov.)

They include expectations that firms will act “fairly, honestly and professionally in consumers’ best interests and deliver good consumer outcomes consistent with the Consumer Duty”.

And that the service firms offer “must be fit for purpose and help consumers make effective choices and act in their own interests”.

The FCA stressed that it wants PDS to be platforms where consumers can “confidently and positively engage with their pensions and be safely supported in retirement planning.”

It added that the rules, which were considered following consultations with stakeholders, are “proportionate” for the first iteration of commercial pensions dashboards.

However, FCA failed to give a timescale when firms will be able to operate pensions dashboards services.

Rachel Vahey, head of public policy at AJ Bell, said the lack of timescale is a “huge let down for customers”.

She said: “This statement is helpful but leaves the pensions industry with only a set of rules and no definitive timescale for when commercial dashboards will become a reality. Setting a clear date for commercial dashboards would allow providers to start planning in earnest. The development of dashboards has already been a bumpy ride with numerous stops and starts, and changes in who is responsible for getting it over the starting line.”

Earlier this year, the government changed the law to bring the new activity of operating a pension dashboard service within the FCA’s regulatory remit.

This legislative change means that a firm wishing to operate a PDS must become FCA authorised, get permission to undertake the new regulated activity and meet its requirements for firms undertaking this activity.

Last month Emma Reynolds, the pensions minister, confirmed that initially people will only be able to access their information by going through the Pensions Dashboard run by the government’s Money and Pension Service (MaPS).

Good morning and welcome to your Morning Briefing for Friday 8 November 2024. To get this in your inbox every morning click here.

Firms in the dark on commercial pensions dashboards delivery date

Firms seeking to operate commercial pensions dashboards services (PDS) have no timescale when this will happen despite the Financial Conduct Authority publishing rules they must follow when designing and operating them.

FCA set out rules for pensions dashboards service firms in a policy statement published yesterday (7 Nov.)

Rachel Vahey, head of public policy at AJ Bell, said the lack of timescale is a “huge let down for customers”.

Closing the advice gap

How do we close the advice gap?

That’s the million-dollar question I’ve heard debated time and again since I joined Money Marketing.

The consensus is that artificial intelligence and the introduction of new technology will free up advisers’ time and enable them to take on and serve more clients.

But could it be the banks that hold the key to closing the gap?

Quote Of The Day

There are some more bullish voices out there, including Goldman Sachs who have forecast UK base rate to fall to just 2.75% by next Autumn. The fact the decision to cut rates was almost unanimous will put some powder in this argument.

-Laith Khalaf, head of investment analysis at AJ Bell, comments on latest interest rate decision from the Bank of England.

In Other News

The Pension Protection Fund (PPF) has published its fifth Responsible Investment report, which reinforces its commitment to promoting sustainability in the pensions industry and demonstrates the power industry engagement and collaboration across its asset managers, portfolio companies, industry bodies and peers has had over the last 12 months.

The annual report summarises the stewardship and governance activities carried out by the PPF that have not only driven greater participation and engagement industry wide, but also have improved reporting, risk analysis, transparency and driving positive change.

Barry Kenneth, chief investment officer at the PPF said: “The last 12 months has been a period of evolution and engagement, and this report outlines our continued commitment to align with the Stewardship Code, showcasing the steps we have taken and measures we have advanced to protect and drive value across our portfolio.

Isio, a provider of pensions and employee benefits consultancy, has announced the launch of its new individual service designed to streamline support for NHS employees affected by the McCloud pensions tax roll-back.

The McCloud remedy addresses age discrimination in the 2015 public service pension reforms. It involves rolling back the 2015 scheme benefits into the previous final salary schemes for affected public sector members.

But many senior NHS staff will have to also revisit up to seven years of self-assessment tax forms by 31 January 2025 (or 3 months after being notified if later).

The new service will help these NHS Pension Scheme members, who will receive a Remediable Pension Savings Statement (RPSS), to collect the required data and submit it to HMRC.

Isio’s service manages the entire process, allowing members to easily claim tax refunds where appropriate (and in some cases pay additional tax charges). The service is to be also available for senior police employees affected by the same issue.

Did You See?

Greg Neall, chartered financial planner at Wake Up Your Wealth, chides journalists, experts, and commentators over their “scaremongering” articles in the lead up to the autumn Budget.

He writes: It’s impossible to count the number of headlines written over the last few months declaring the 25% tax-free pension lump sum was in danger of being scrapped in last week’s Budget to boost clicks and comments.

Anyone with a working brain and the slightest bit of political nous could see there was no way the chancellor would do something so politically suicidal, especially after the Winter Fuel Allowance fiasco. Shame on those claiming it was ever likely.

There was also a glut of poorly-researched pieces on how the lump sum allowance might come down to £100,000.

Read the full article here.

THOUSANDS of hard-up households could get £115 free cash paid directly into their bank accounts before Christmas.

Struggling households can claim the money through the government’s Household Support Fund (HSF) now.

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The HSF was extended for the sixth time from October 1, meaning households can claim help from a fresh £421million pot of funding.

Councils across the country have received a portion of the cash to distribute to those in need.

But there is a postcode lottery to determine who qualifies as each local authority can set its own eligibility criteria.

Despite this if you have a limited amount of money or savings in the bank, or are deemed to be vulnerable or on benefits, you will probably qualify for help.

Money will either be given to you as a direct cash transfer, shopping vouchers, energy support or in another form.

The amount handed out varies and the local council will determine this.

In York people of working age who receive Council Tax Support can apply to receive a payment of £115 directly into their bank account.

Those eligible for the payment will receive a letter this month with the instructions to register.

Those who need assistance with food, energy or water bills who do not receive Council Tax Support or are over pension age can also apply for a discretionary payment.

If you apply for a discretionary payment you will need to complete a means-tested assessment including personal financial information.

If you don’t live in York you should check with your local authority to see what support it is offering.

Rotherham Council is now offering struggling families £250 grants to fight the cost-of-living increase.

Those living in Birmingham can claim £200 to help with soaring winter energy payments.

Meanwhile, Wakefield Council is offering support to pensioners who will miss out on the winter fuel payment this year.

What is the Household Support Fund?

The Household Support Fund was introduced in October 2021 by The Department for Work and Pensions (DWP) to support households most in need.

The funding is distributed between councils, and they are then responsible for dishing out the cash on an application basis.

For example, Birmingham City Council have announced they will hand out free £200 cost of living payments to help its residents cope this winter, as one of its approaches to the fresh fund.

How do I apply?

In order to be eligible for help, you may have to be in receipt of benefits or provide proof of being in financial difficulty.

Each council has a different application process – so you’ll have to ask your local authority or find out via your council’s website.

Not all councils have decided how they will distribute the cash yet, so you may have to wait to get all the information.

To find out how to contact your local authority, use the gov.uk authority tool checker.

In the last round of funding, some residents received their share automatically, while others had to apply.

For example, Haringey London Council is issuing automatic payments to eligible residents, as well as a support fund which can be applied to.

It is also issuing payments to schools, which means they can distribute free school vouchers.

In previous years, other authorities have offered cost of living vouchers – such as Coventry City Council.

This has included a Community Supermarket scheme, where all Coventry residents could pay £5 weekly and receive a basket of food worth up to £25.

Residents of Effingham, near Guildford, have been able to claim up to £300 free cash to help with the cost of living crisis.

Surrey council previously poured £300,000 into food banks, where photo ID and proof of address is required, but no referral needed.

While some schemes, such as the Surrey Crisis Fund, which can offer up to £100 to those immediately in need, are reserved for those who also rely on other means-tested benefits.

How has the Household Support Fund evolved?

The Household Support Fund was first launched in October 2021 to help Brits pay their way through winter amid the cost of living crisis.

Councils up and down the country got a slice of the £421million funding available to dish out to Brits in need.

It was then extended in the 2022 Spring Budget and for a second time in October 2022 to help those on the lowest incomes with the rising cost of living.

The DWP then confirmed a third extension of the scheme through to March 31, 2024.

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Former chancellor Jeremy Hunt extended the HSF for the fourth time while delivering his Spring Budget on March 6, 2024.

In September 2024, the Government announced a fifth extension.

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