The FCA launched its Market Study into the distribution of pure protection products in 2024, signalling a renewed and wide-ranging focus on fair value, commission structures, competition and how consumers access protection products. The study examines not only remuneration models, but also routes to market and the tools insurers and intermediaries use to engage customers, including online portals, price comparison websites and lead-generation models.
Following information requests to around 30 insurers and intermediaries, the FCA published its Market Overview paper in September 2025, setting out early findings. While the regulator acknowledged areas of progress, including improving claims payout rates and broader coverage for medical conditions, it was clear that significant challenges remain. In particular, the FCA highlighted persistent protection gaps, limited digital accessibility (especially for vulnerable customers), and a lack of transparency around panel arrangements and remuneration structures.
Importantly, the Market Study is forward-looking. It is not designed to assess past misconduct or drive immediate redress. However, it has the potential to reshape the future regulatory framework for pure protection distribution, and its implications should not be underestimated as firms look ahead to the interim report due in Q1 2026 , as Joe Norburn, CEO of TCC Group (TCC, Momenta and Recordsure) explores…
Commission models and fair value under scrutiny
A central focus of the study is whether commission arrangements affect product value, design or consumer choice, and whether competition in the market is working effectively. Unlike other retail insurance products, there is currently no requirement in the protection market to disclose commission values or explain how they impact premiums.
Against the backdrop of the pending Supreme Court decision on motor finance commissions, there is growing attention on what increased scrutiny may mean for other commission-based sectors. Even where ICOBS (Insurance: Conduct of Business Sourcebook) disclosure requirements are met, the FCA remains concerned about information asymmetry between customers and firms, particularly around understanding protection needs, available options and whether the price paid represents fair value.
Indemnity commission structures, panel models and clawback arrangements are all under review. While designed to support distribution, these models can incentivise unsuitable sales, unnecessary switching and repeated re-broking, with implications for both pricing and competition. Panel arrangements are also being assessed for their impact on innovation, customer choice and market access for smaller insurers.
The FCA is also considering whether aspects of product design, pricing and remuneration have unintended consequences for customers later in the product lifecycle, including in how easily they can make claims or access post-sale support.
Post-sale friction is also under the spotlight, including whether policy wording, digital journeys and customer service arrangements make it unnecessarily difficult for customers to claim or use the features of the cover they have purchased.
Distribution practices and vulnerable customers
The FCA is closely examining how different distribution channels influence customer outcomes. Lead generation and non-advised sales models, which often promote the lowest premium options, can disproportionately affect vulnerable customers, who may lack confidence, awareness, or the time and capability to navigate complex choices, and who may benefit most from advice.
Vulnerable customers remain a particular regulatory priority. Those with health conditions can struggle to access affordable cover, while others face digital barriers when navigating online journeys. The FCA is assessing fair value not just in terms of price, but in relation to the cover provided, particularly at the lower-value end of the market, and how easily customers can understand policies, make claims and access post-sale support.
Evidence from consumer research
The FCA’s Pure Protection Market Study: Consumer Research Summary, published in December 2025, provides further insight into the scale of the challenge. Only 42% of respondents held a pure protection policy, either through employment or private purchase. Affordability, lack of perceived need and low confidence in obtaining cover were the most common reasons for not having protection.
A further proportion of customers reported having reduced or cancelled cover in recent years due to changing financial circumstances, reinforcing concerns around affordability and long-term sustainability. Worryingly, those without cover were more likely to report low financial resilience, poorer health and lower financial capability, characteristics commonly associated with vulnerability. Between 18% and 28% of customers reported compromising on policy choice due to affordability or health concerns, potentially leaving them with cover that does not fully meet their needs.
So what should firms be doing now?
With the interim report due in Q1 2026, firms should not wait for final conclusions. The FCA has been clear that fair value cannot be judged on price alone, but on whether products meet genuine customer needs, are supported by transparent pricing and remuneration, and deliver good outcomes throughout the customer lifecycle.
Firms should act now to:
- Review product governance and distribution strategies across advised and non-advised channels
- Assess whether incentive and commission structures are driving appropriate outcomes
- Revisit fair value assessments, particularly for vulnerable customer cohorts
- Improve the clarity and timing of customer communications
- Strengthen management information to evidence outcomes across channels, journeys and customer types
- Consider lessons from the FCA’s Roadmap for Retail Insurance
The message from the FCA is consistent and clear: firms that can evidence strong governance, transparent remuneration and demonstrably good customer outcomes will be best placed as regulatory expectations continue to rise.
