FCA highlights UK protection gap, urges education
The Financial Conduct Authority says the UK faces a large protection gap. Millions lack life, critical-illness or income-protection cover, leaving families exposed if a breadwinner dies, falls ill or loses work.
Data released by the FCA show 58% of adults have no such cover. Even more striking, 59% of those without protection have never thought about it, highlighting a lack of basic awareness.
Officials point to two sides of the problem. On the demand side, low awareness, limited understanding of products and behavioural biases keep people from considering cover. On the supply side, complex underwriting, friction in the sales journey and few products for customers with special needs add barriers.
To address these issues, the FCA announced a partnership with industry bodies, government agencies and consumer groups. The collaboration will focus on education, simplifying product design and improving the advice process.
Mortgage advisers are a key focus. The FCA notes that advisers often spend time on rates, affordability and lender choice but may treat protection as an afterthought. Integrating cover discussions into the core mortgage conversation ensures clients understand what would happen if their income stops.
While the FCA does not claim the market is broken, it stresses that consistent, scalable change is needed. Advisers must have clear processes, the capacity to discuss protection, motivation to raise the topic, proper training and ongoing coaching. Without these elements, even well-intentioned advice can fall short.
In practice, this means building a simple workflow that flags protection as a standard step, ensuring advisers have time to explain options, and monitoring outcomes to refine the approach. Networks that support independent firms should provide frameworks and oversight without dictating every detail, preserving adviser autonomy while meeting regulatory expectations.
Industry response and next steps
Industry groups say they will work with the FCA to develop tools that reduce friction, such as streamlined underwriting and clearer product disclosures. Consumer organisations will help raise public awareness about the risks of being uninsured.
Advisers are urged to view protection not as a compliance checkbox but as a genuine benefit for families. When they believe in the value of cover, that confidence translates into more meaningful client conversations.
Ultimately, the goal is not simply to sell more policies. The priority is to increase the number of people who recognise their financial vulnerability and make informed choices. If that happens, higher take-up rates should follow naturally, reducing the number of households caught unprepared by illness, injury or death.
