Protection review

When is a mortgage calculator not a mortgage calculator

Kevin Carr

MD, Carr Consulting & Communications

Last month, the Advertising Standards Authority (ASA) launched its annual report in which it made it clear that it intends to rebalance its regulation “to be more proactive” and aims to use technology and AI to better regulate advertising at scale.

One of the areas this will affect significantly is lead generation.

When done right, lead generation is undeniably beneficial for sellers, buyers, and the end customer alike. But, sadly, far too many firms are still not using customer data properly.

While the more obvious misuses of customer data are often easy to identify – false claims within advertising, reselling of customer data, etc – one technique that is becoming more and more common (and is an area in which the ASA is becoming particularly interested) is where firms appear to be offering a useful service – i.e., an online comparison, or calculator – but are in fact providing an introduction.

While the customer in this situation is almost certainly unaware that they have become a lead, the buyer of the lead also often claims innocence, saying they had no idea how that lead had been generated.

In its Consumer Duty paper, the FCA is cracking down on these “Oh I didn’t know what my lead gens were doing” or “They told us they were doing things compliantly” excuses and putting the onus on the lead buyer to do its due diligence and keep documented proof of how they work with third-party lead-gen companies.

This – combined with the fact the ASA is going to be relying less on consumers reporting they’ve been tricked, and more on stopping those practices in the first place – has created a significant shift in liability.

“We have long been pushing for more transparency in the customer journey, and the ASA’s renewed focus on proactive regulation at scale combined with the FCA’s Consumer Duty paper is certainly welcome news for us and others working hard to clean up lead gen,” said Alain Desmier, founder of Contact State, a firm that certifies leads for buyers.

“The FCA is basically saying lead buyers are responsible for the advertising that generated the lead, even if they are paying a third party. And that if they buy leads where the consumer has been tricked, via a tool online, both they and the lead seller are in breach of the spirit and detail of the consumer principle behind the consumer duty.”

Ultimately, for the financial services industry to clean up lead gen – and meet ASA and FCA requirements – they need to keep to one simple mantra: consent is king.

When it comes to mortgage leadgen, buyers need to be sure they understand the customer journey before that customer is contacted. With these new rules, a lead generator using tools like calculators to generate leads will have to specifically declare they are a lead generator via a very clear disclaimer, because ultimately, every consumer has the right to know what they are consenting to, who they have shared their data with, and what is going to happen next.

Desmier warns, “Lead generators need to rethink any tools and calculators they are providing, as they will now come under renewed scrutiny, while lead buyers need to be aware that they, too, can be held accountable for their lead generators’ practices.”

There is clearly no easy fix in stamping out bad lead-gen practices, and those who abuse the system will continue to find new loopholes, but as the ASA, FCA, and other regulatory bodies crack down on fraudulent practices, it should encourage more firms to invest in creating a better standard of financial services lead generation, and put a stop to consumers ending up in a financial conversation they weren’t expecting.

NEWS ROUND-UP

• British Friendly has launched levelguaranteed premiums on its short- and long-term income protection product

Protect as a new, second premium option in addition to its existing agecosted guaranteed premiums. • CIExpert has appointed Paul

Roberts as its new propositions and distribution director. • Lloyds Banking Group has agreed a deal to buy protection distributor

Cavendish Online for £12 million. • A former investment banker has been sentenced following a fraudulent cancer claim on a life insurance critical illness policy and an investment scam totalling nearly £2 million. • LV= paid out £5.4 million on individual income protection claims during the first four months of the year, the provider has detailed. • Insurance technology provider iPipeline has released the latest update to its product features report service, allowing advisers to review quotes and product quality more efficiently regardless of product combination or complexity. M I

Blockages in mortgage market affect life sector

Mike Allison

head of protection, Paradigm Mortgage Services

For some time, the entire mortgage advisory world – or at least those who engage in writing protection business – has been engaged in a debate as to the perfect time to introduce protection into mortgage conversations in order to get the best results from clients.

The very questions asked of distributors by insurers at various reviews regarding the percentage of penetration from mortgage applications to protection applications show how sought-after a statistic this is. I have known networks, in the past, to use it as a measure of note when looking at the key performance indicators of AR firms.

Many would say engaging the customer at the outset is the way forward, even if it is only to highlight that the conversation will take place at some stage.

Different IT organisations within mortgage sourcing systems have spent considerable time, energy, and cash working on indicative premiums to give to the client while carrying out the mortgage factfind – allowing the customer to at least start to consider the pricing before going through the whole protection factfind and suitability process.

At Paradigm we have seen how the usage of Solution Builder within many of our DA firms has supported the increase in the number of products sold per application to cover the requirements of the consumer. The rationale for this has been based more on affordability than the exact sums required to just cover the mortgage – one of the reasons we offer the software free to users of the Paradigm Protect proposition. There is little doubt it helps to drive better consumer outcomes when applied in the sales process.

The debate here is how practical it is in today’s mortgage environment to get the application process started for life cover at the same time as the mortgage application, and which pitfalls are increasingly being encountered on the way.

There is little doubt that placing a mortgage these days is by no means easy. Criteria changes, affordability, and the availability of funds are all challenges that could be having a knock-on effect on the time it takes and on clients’ attitudes to discussing protection to go alongside a mortgage.

One of the biggest challenges of all is the time it is taking for conveyances to take place. Of course, conveyancers rely on a number of agencies to support their work, but recent information seems to suggest it is taking up to six months to go through the process. This clearly has an effect on the consumer experience when applying for a mortgage.

As well as the negative customer experience, there is another knock-on problem for those who have done the protection work at the same time as the application – that of the underwriting of the client(s) that may have taken place in the early stages of the process.

Generally, once insurers have offered an acceptance to the client based on the evidence submitted, they will only hold that acceptance open for a period of three to possibly six months before requiring further medical evidence from the client.

The thought of customers going through a plethora of paperwork for more than one lender and then having to wait for the legal process to take its course understandably renders them less than delighted to go back to an insurer at the end of the process to re-state their underwriting credentials. I have heard from more than one source that once a house purchase went through, that was the last straw, and the protection case(s) did not go ahead.

So what can advisers do to soften the experience?

As well as explaining the likelihood of delays in the current environment, it may be prudent to look at what different insurers are doing to support the process and making it easy to complete health declarations when and if required.

This is by no means an extensive list of what insurers are doing, but I am aware that, more recently, Legal & General added to the OLPC system to smooth the process. If the case is under £500k life or £350K CIC, and for all income protection cases, it offers a sixmonth period.

They will accept a signed paper copy of a Declaration of Health (DoH) scanned into an email, or the client can complete it over the phone with the service team – but now, OLPC will trigger an in-built form to complete online via the intermediary. Seven days before the DoH requirement, the agent is automatically emailed a reminder that it will soon be due, and on entering OLPC agents can hyperlink straight to the question set. They can now complete the three key questions online, signing electronically using their secure access, thereby providing a much smoother journey for client and intermediary. Vitality, too, have started to use electronic signatures for their DoH requirements.

It may be worth taking these underwriting factors into consideration when making applications that could take some time to complete, and it is definitely worth talking to insurers as to how they are helping mortgage advisers get over what we all hope will be a short-term blip rather than an ongoing industry problem. M I