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Lucy Brown: FOS ruling shows why research matters

A recent decision by the Financial Ombudsman Service to uphold a complaint following “unsuitable” life insurance advice has put a spotlight on the importance of proper research.

The case concerned a 53-year-old client who had been told by her adviser that life cover premiums were likely to be “excessive and unaffordable” for her.

The Ombudsman found there was no evidence the adviser had carried out any research, obtained any quotes or discussed costs with the client.

The case provides a stark reminder to advisers of the importance of exploring all available options when trying to place cover.

It also highlights how crucial it is to keep evidence of this research, along with records of conversations held with clients surrounding their needs, the costs involved and the different options open to them.

Advisers put off protection products by complexity

While conducting sufficient research is vital, finding the right cover for people with existing health conditions can be both challenging and time-consuming.

Traditionally, an adviser will get a quick quote, talk to providers and then submit an application.

Premiums may then be loaded based on a provider’s full assessment and underwriting.

At this point, the case may or may not progress, with the client potentially losing faith they will ever be able to find affordable cover or, in fact, get any cover at all.

Advisers often have to go through the whole process again if they want to find the right policy at the right price.

Doing a proper job as a whole-of-market adviser should involve talking to every provider to find the best solution, but this is not a quick or easy task.

Even if all the right research is completed, it can be difficult to get an accurate costing without submitting a full application, as all the medical questions that might have an impact on premiums need to be covered.

There will invariably be some occasions when advisers cannot help but, here, it is important to signpost clients to specialist firms that can. Fortunately, technological advances are beginning to help advisers find the right policy and provider more efficiently, while keeping records of their work.

Do we need more detail on declined claims?

For example, online platforms such as UnderwriteMe provide immediate underwriting.

This saves advisers the task of telephoning multiple insurers or submitting several applications.

The service has just launched an improved underwriting questionnaire which further speeds the process up, reducing the number of questions asked by at least a third.

These quotes provide advisers with a more definite premium, taking into account the client’s individual situation.

Any research and work carried out by the adviser is saved to the platform, so there is no need to start from scratch if cover is initially refused.

As well as reducing the amount of time taken by advisers to explore all available options, more importantly this results in the best possible outcomes for clients.

It is good to see more providers working with tech firms to improve efficiency for the overall benefit of the market.

Lucy Brown is head of protection at London & Country

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