The FCA has now published its interim report into the distribution of pure protection products, and we want to share what matters most for you.

The regulator’s overall view is a positive one. The FCA concludes that, in many respects, the protection market is working well and delivering good outcomes for customers. Claims acceptance rates remain high, complaints are low, and advisers are clearly recognised as playing a vital role in helping customers understand their needs and access appropriate cover. Importantly, the FCA has been clear that it is not anticipating significant market‑wide intervention and is not considering banning or capping commission.

Where the FCA does highlight areas for continued focus, these are practical and proportionate, and how Sesame already operates is closely aligned. This includes having clear oversight around policy replacement, being able to evidence why recommendations are right for the customer, and supporting good outcomes beyond the initial sale. This is about maintaining strong standards and good practice across the market, not changing the fundamentals of how protection advice works. 

As your network, our role is to stay close to developments like this and make sure you have clear, straightforward guidance where it’s needed. We’re reviewing the report in full, engaging with industry discussions ahead of the final report, and will continue to keep you informed. The message from us is consistent: you are supported, you are well‑placed, and protection, done properly, remains a core part of delivering the right outcomes for your clients and their families.

What this report means for you

You can take confidence from the FCA’s recognition of the adviser role. Around 80% of protection policies are sold through intermediaries, and the regulator is clear that professional advice is central to helping customers navigate a complex market and make informed decisions. 

There is no indication of immediate or fundamental change to how protection is sold or how advisers are remunerated. The FCA found no evidence of widespread consumer harm from commission structures, loaded premiums or restricted panels, and does not believe more interventionist measures would be proportionate. 

The areas the FCA wants firms to continue focusing on will feel familiar. Clear documentation, robust processes around policy replacement, and supporting customers through to claim stage all reinforce the standards already expected under Consumer Duty. These are areas where Sesame’s existing oversight, systems and controls are designed to support you. 

The report also reinforces the scale of the protection opportunity. A significant proportion of adults still do not hold protection, and many have never actively considered their needs. Advisers remain central to helping close that gap, particularly at key life stages such as buying a home or starting a family. This report underlines the value of the work you do every day. 

As always, if anything in the FCA’s final report requires change, we’ll be clear, practical and supportive in how we approach it. Until then, our message is unchanged: keep doing the right thing for your clients, and we’ll continue to support you every step of the way.

Your questions

- Is the FCA changing how protection commission works?

No. The FCA has been clear that it is not considering banning or capping commission, and it is not proposing significant market‑wide intervention. The report recognises that commission, when properly governed, supports access to advice and good customer outcomes.
 

- Do I need to change how I’m selling protection now?

No immediate changes are required. The FCA’s focus is on maintaining good practice: clear suitability, appropriate documentation, and being able to explain why a recommendation is right for the customer. These are principles you’ll already be familiar with.

- Is policy replacement or rebroking still acceptable?

Yes. The FCA recognises that customer needs change over time and that switching can be appropriate where it delivers a better outcome. The emphasis is on being able to clearly evidence the customer need and benefit, rather than switching for its own sake.

- Are loaded premiums or panels a concern?

The FCA has reviewed loaded premiums and restricted panels and, at this stage, they are not a concern. However, the expectation remains that distribution arrangements support fair value and good outcomes.

- Will Sesame be making changes off the back of this report?

We’re reviewing the detail and engaging with industry discussions ahead of the final report. If anything practical needs to change, we’ll be clear, proportionate and supportive in how we approach it. At this stage, the report reinforces the direction we’re already taking.

- What does this mean for the future of protection advice?
The FCA continues to see advisers as central to closing the protection gap and helping customers understand their needs. This report reinforces the importance and value of protection advice, particularly at key life stages.

Key takeaways from the interim report

1. The FCA believes the protection market is largely working well

The FCA’s overall conclusion is reassuring. In many respects, the distribution of pure protection products is delivering good consumer outcomes, and the regulator is not anticipating significant market‑wide interventions.

Key indicators supporting this include:

• Around 16.2 million people (30% of UK adults) held a pure protection policy in 2024

• Insurers paid out £5.3bn in claims in 2024

• 98% of claims were accepted across pure protection products

• Complaints are low, with 515 upheld complaints out of 13.8m policies in force in 2024

The FCA explicitly states in the report that it is not considering banning commissions or capping them, as this would risk unintended consequences, including worsening the protection gap.

2. Advisers are central to good outcomes, and the FCA recognises this

Intermediaries play a critical role in the protection market:

• 80% of new protection policies in 2024 were sold via intermediaries

• There were around 12,000 active intermediaries operating in the market in 2024

• Around 70% of sales are advised, reflecting the complexity of protection products and the value of professional advice

The FCA describes protection as a product that is often “sold, not bought”, with advisers helping customers understand need, value and suitability. This aligns closely with how Sesame advisers already operate.

3. Commission structures are under scrutiny, but there is no evidence of widespread harm

The FCA examined commission in detail and found:

• No evidence of high intermediary profitability across the market overall

• Commission revenues have remained broadly stable between 2021 and 2024

• Loaded premiums and restricted panels have been reviewed and are not considered an area of concern at this time

Around 26% of intermediated sales in 2024 involved loaded premiums, but the FCA found that premium levels were similar to non‑loaded policies when comparing like‑for‑like cases.

This supports the FCA’s view that commission, when managed properly, does not automatically lead to poor customer outcomes.

4. Policy switching (churn) is a key area of future focus

One area where the FCA wants improvement is monitoring and reporting on policy switching:

• A small spike in lapses is seen shortly after clawback periods end

• This equates to fewer than 19,000 customers per year, or around 0.2% of policyholders, who may be affected

Importantly:

• 80% or more of protection sales are to new customers, not replacements

• Customers who do switch still have cover, meaning harm is limited

The FCA’s intention is not to stop legitimate reviews or rebroking, but to ensure switching is clearly aligned to customer need, with better data and proportionate reporting.

5. Claims experience and post-sale support matter more than ever

The FCA highlights examples of good practice that improve customer outcomes at claim stage, including:

• Writing policies in trust

• Supporting wills and powers of attorney

While many advisers already do this, the FCA wants to see these practices become more widespread, as they significantly improve customer experience if and when a claim is made.

This aligns strongly with Consumer Duty expectations around ongoing value and support, not just point‑of‑sale advice.

6. The protection gap remains a major opportunity

Despite a market that works well for existing customers, the FCA is clear that a significant protection gap remains:

• 58% of adults do not hold a pure protection product

• Of those, 59% have never considered their protection needs

• FCA‑commissioned research estimates that around 72% of identified protection needs are unmet

The regulator sees advisers as central to narrowing this gap, particularly at key life events such as buying a home, starting a family or changing employment.

7. What happens next

• The FCA is consulting on the interim findings until 31 March 2026

• Workshops with industry will take place in Spring 2026

• The final report is expected in Q3 2026

The FCA has been clear: it intends to use existing rules and supervision first, rather than introducing new, heavy‑handed regulation.