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).

THOUSANDS of parents are paying more than they need to for baby milk because of a lack of competition in the market, a government watchdog has warned.

At the moment there are two dominant baby formula companies – Danone and Nestle – who make up 85% of all sales.

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As a result, there is little incentive for these manufacturers to compete to offer the best price, the Competition and Markets Authority (CMA) warned.

The news comes after the boss of Iceland Richard Walker last year hit out at “exploitation” of new parents and called for action to be taken in the industry.

Over the past few years it has become more expensive to manufacture infant formula and these costs have been passed on directly to customers.

Parents often choose baby formula for the first time when they are in vulnerable situations such as in hospital straight after birth.

Often they make the choice when they do not have access to clear, accurate and impartial information, the watchdog warned.

Parents are also often under a lot of pressure to do what is best for their baby.

As a result, they can often choose a more expensive product as they assume that a higher price will mean it is better quality.

This is not true as the NHS advises that “it does not matter what brand you choose, they’ll all meet your baby’s nutritional needs, regardless of price”.

Parents also often listen to advice from friends and family when choosing a formula, which means the brand’s reputation plays a much larger role in the decision making.

Sarah Cardell, chief executive of the CMA, said it is concerned that companies “don’t compete strongly on price”.

She added: “We have identified options for change, but now want to work closely with governments in all parts of the UK, as well as other stakeholders, as we develop our final recommendations.”

The CMA has set out several potential options which could help to improve the industry and reduce the cost for parents.

It wants to provide new parents with clear, accurate and impartial information, for example in hospitals.

The CMA may also allow companies to publicise their prices and price reductions, which they are currently not allowed to do.

It also wants to strengthen labelling and advertising rules as branding is a large part of the reason that parents choose a certain product.

This could be done by requiring manufacturers to use entirely different branding for their infant and follow-on formula.

The CMA may also implement stricter rules around certain messages on packaging.

In the long term the government may also be forced to take more significant action to bring down costs, such as introducing price caps.

The CMA will publish a final report on baby formula in February 2025.

What help is there for parents?

If you receive certain benefits and are pregnant or have at least one child under the age of four then you can apply for Healthy Start vouchers.

You will get:

• £4.25 each week of your pregnancy
• £8.50 each week for children from birth to one year old
• £4.25 each week for children between one and four years old

The money will stop after your child’s fourth birthday or if you no longer receive benefits.

If you are eligible you will be sent a Healthy Start card with money on it that you can use in some UK shops.

The money will be added onto this card every four weeks.

You can use the card to buy:

• Plain liquid cow’s milk
• Fresh, frozen and tinned fruit and vegetables
• Fresh, dried and tinned pulses
• Infant formula milk based on cow’s milk

To be eligible for the scheme you must be receiving one of the following benefits:

• Income support
• Income-based jobseeker’s allowance
• Child tax credit if your family’s annual income is £16,190 or less, and not getting working tax credit
• Universal credit if your family’s monthly earned income is £408 or less from employment
• Pension credit

You can apply for the scheme on the NHS website.

Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.

Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories

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.