The FCA’s Market Study into the Distribution of Pure Protection Products to Retail Customers (MS24/1.5) published on 21 September 2026, concluded that competition in the pure protection market is generally working well and delivering positive outcomes for consumers who hold protection products. However, the FCA also identified a significant “protection gap”, with many consumers remaining uninsured despite potential protection needs. As a result, the FCA has announced a package of FCA, industry and stakeholder-led initiatives designed to improve consumer awareness and access to protection products without introducing significant new regulation
Key Findings
The FCA found that the market is broadly functioning effectively, with:
- A wide range of protection products available to consumers.
- High claims acceptance rates and generally positive outcomes for policyholders.
- Relatively low levels of complaints compared with other insurance products.
- No evidence warranting market-wide intervention on commission structures or pricing models at this stage.
Despite these positive findings, the FCA highlighted concerning levels of underinsurance:
- 58% of consumers do not hold any protection products.
- Of those without protection, 59% have never considered their protection needs.
The FCA is concerned that limited consumer awareness, poor understanding of protection products, and barriers within distribution and sales processes may be contributing to the protection gap, particularly among lower-income households, renters, self-employed and gig economy workers, individuals with pre-existing or complex medical conditions, and consumers with lower levels of financial resilience.
FCA Expectations for Firms
While the FCA is not introducing significant new requirements, firms are expected to continue meeting their obligations under existing frameworks, including:
- Consumer Duty;
- Product Governance requirements;
- Fair Value requirements; and
- Customer understanding and consumer support outcomes.
The FCA has emphasised that it will continue to monitor firms and take supervisory action where standards fall short.
Actions for Retail Firms
Retail firms should consider whether:
- Customer communications clearly explain protection needs, benefits and key product features.
- Sales and advice processes support informed decision-making and minimise barriers to accessing protection products.
- Protection discussions are taking place at relevant customer life events, such as taking out a mortgage, renting a property or starting a family.
- Recommendations to switch or replace existing policies can be demonstrated to deliver fair value and be in the customer’s best interests.
- Products, services and distribution channels adequately meet the needs of underserved customer groups. Industry Initiatives and Next Steps
A number of industry-led initiatives are expected to support efforts to reduce the protection gap, including:
- Consumer awareness campaigns led by the Protection Distributors Group (PDG).
- Work led by the Association of Mortgage Intermediaries (AMI) to improve protection discussions between advisers and customers.
- Collaboration with the Money and Pensions Service (MaPS) and the Digital Property Market Steering Group to prompt consumers to consider protection products at key life events.
The FCA has stated that implementation work began in October 2026, with industry and FCA-led measures expected to commence by the end of 2026. Progress will be monitored over the next 12-18 months, and the FCA is considering a potential TechSprint in Q3 2027 to explore technology-enabled solutions to address the protection gap.
Key Takeaway
Although the FCA has concluded that the pure protection market is delivering generally good outcomes, the statistics showing that 58% of consumers have no protection products and 59% of those individuals have never considered their protection needs demonstrate the scale of the protection gap. Firms should use the findings of MS24/1.5 as an opportunity to review customer engagement, distribution journeys and Consumer Duty outcomes, with a particular focus on improving customer awareness, accessibility and understanding of protection products.
How Complyport can help?
- Consumer Duty and Customer Outcome Reviews: We help firms assess whether their customer communications, sales journeys and protection discussions align with Consumer Duty requirements and support good customer outcomes. This includes reviewing customer understanding, consumer support and fair value considerations across the distribution process.
- Product Governance and Distribution Frameworks: Our team can review product governance arrangements, target market assessments and distribution strategies to ensure protection products are reaching the intended customer groups and that firms can demonstrate compliance with FCA expectations.
- Gap Analysis and Regulatory Readiness: We assist firms in evaluating their current practices against the findings of MS24/1.5, identifying areas for enhancement in customer engagement, sales processes, policy switching controls and support for underserved customer segments, helping firms prepare for future FCA supervisory scrutiny.
To understand how the FCA’s study may affect your business, arrange a meeting with one of our compliance experts.
Discover how Complyport can support your compliance needs. Visit https://complyport.tech/ to learn more about our RegTech solutions.
