The Intermediary – September 2025 - Flipbook - Page 82
P RO T E C T I O N
Opinion
Not just in passing,
a duty of care
T
he past few months
have seen some
welcome easing of
affordability for
borrowers – opening up
the market for more to
move and refinance their homes.
Of course, it is not perfect, and more
oen than not conversations around
affordability centre on the thorny
subject of disposable income and a
borrower’s ability to save in order to
cover unexpected costs.
When you’re a homeowner and
mortgage payer, the likelihood
of unexpected and large costs
hiing when least convenient rises
considerably. Protection, then, is
more important than ever. Not just
for the borrower’s future financial
stability, but also to protect advisers
from possible future complaints.
Research published over the
summer by LifeSearch and the
HomeOwners Alliance found
that more than a third (36%) of
homeowners with a mortgage have
no life insurance, income protection,
or critical illness cover in place –
equating to approximately 2.34
million individuals.
Almost half (46%) of mortgage
holders said they would struggle
to meet their payments within six
months of losing their income due to
illness or injury. One in five would
face financial difficulties within just
two months.
For advisers, this speaks to an
uncomfortable reality. Two out of
three borrowers who took part in
the research said they had spoken to
a bank, mortgage adviser or family
member about protection insurance
when taking out their mortgage. Just
16% currently have income protection
in place.
The scale of under-protection in
the UK is hard to measure, but some
have tried. In 2019, Swiss Re estimated
a shortfall in the UK of £2.4tn – a
number that is so big few of us can
80
The Intermediary | September 2025
really make any sense of it. I had to
google how many zeros constitute a
trillion – it’s 12, if you are interested.
CRAIG HALL
is director, strategic
partnerships, financial services
at LSL Property Services
Unpacking the benefits
What clients do understand are
their own circumstances, and what
the impact of being unprotected
means to them. Many employees are
unaware until they ask just what their
employer’s sickness policies are, and
oen find they rely on Statutory Sick
Pay (SSP), which is a limited benefit.
When I was advising, I oen asked
clients if they really knew their
employee benefits. The reality is that
most were unsure, and therefore I
would seek to clarity by calling their
employers – with their permission –
mid-interview. The outcome of the
call would oen confirm they would
receive less than they thought. The
conversation about protection became
much more pressing and meaningful.
This is even more important when
you consider that the Chancellor’s
decision to hike employers’ National
Insurance contributions has been
devastating for companies.
Small businesses have seen profits
literally wiped out, while larger
businesses have taken a scythe to their
workforces to offset the massive extra
cost, this could also lead to further
reductions in what an employer is
offer in terms of sick pay.
Around 89,000 jobs in restaurants,
bars, pubs and hotels have been axed
since last October, according to UK
Hospitality analysis of Office for
National Statistics (ONS) data.
ONS data published in August
showed the number of payrolled
employees in the UK fell by 149,000
between June 2024 and June 2025
and by 26,000 between May 2025 and
June 2025.
The estimated number of vacancies
in the UK fell by 44,000 (5.8%) on
the quarter in May to July 2025. This
is the 37th consecutive period where
vacancy numbers have dropped
compared with the previous three
months, with vacancies decreasing in
16 of the 18 industry sectors.
LifeSearch’s research found that
without adequate cover, many
mortgage holders said they would
need to take decisive action to stay
afloat. While some would reduce nonessential spending (29%) or request
a mortgage payment holiday (26%),
others would borrow from family or
friends (19%), sell valuables (19%), or
rely on Government support such as
Universal Credit (15%).
Additionally, nearly one in five
(19%) would reduce their pension
or savings contributions, which
could affect their long-term
financial security.
This has major implications for
advisers under the Consumer Duty
rules, which state unequivocally that
regulated firms should be considering
how to deliver good financial
outcomes to customers.
Notwithstanding the challenges
facing young buyers, it’s clear that
there is an opportunity and a need
for mortgage advisers to step up their
game on protection.
September is an ideal time to start,
as we are set to see a spike in the
number of borrowers with mortgage
maturities in Q4, along with the
seasonal surge in homebuying,
with customers seeking to find their
dream home and move in ahead of
Christmas.
Clients must be made aware of the
vital role Protection plays in keeping
the roof over their head, should an
unexpected life event occur.
It is not enough to mention
protection in passing. It’s a duty
of care. ●
